[House Hearing, 116 Congress] [From the U.S. Government Publishing Office] PROTECTING CONSUMERS AND COMPETITION: AN EXAMINATION OF THE T-MOBILE AND SPRINT MERGER ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS FIRST SESSION __________ FEBRUARY 13, 2019 __________ Serial No. 116-5 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Printed for the use of the Committee on Energy and Commerce govinfo.gov/committee/house-energy energycommerce.house.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 35-688 PDF WASHINGTON : 2020 COMMITTEE ON ENERGY AND COMMERCE FRANK PALLONE, Jr., New Jersey Chairman BOBBY L. RUSH, Illinois GREG WALDEN, Oregon ANNA G. ESHOO, California Ranking Member ELIOT L. ENGEL, New York FRED UPTON, Michigan DIANA DeGETTE, Colorado JOHN SHIMKUS, Illinois MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas JAN SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana G. K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio DORIS O. MATSUI, California CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland PETE OLSON, Texas JERRY McNERNEY, California DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York GUS M. BILIRAKIS, Florida YVETTE D. CLARKE, New York, Vice BILL JOHNSON, Ohio Chair BILLY LONG, Missouri DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana KURT SCHRADER, Oregon BILL FLORES, Texas JOSEPH P. KENNEDY III, SUSAN W. BROOKS, Indiana Massachusetts MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California RICHARD HUDSON, North Carolina RAUL RUIZ, California TIM WALBERG, Michigan SCOTT H. PETERS, California EARL L. ``BUDDY'' CARTER, Georgia DEBBIE DINGELL, Michigan JEFF DUNCAN, South Carolina MARC A. VEASEY, Texas GREG GIANFORTE, Montana ANN M. KUSTER, New Hampshire ROBIN L. KELLY, Illinois NANETTE DIAZ BARRAGAN, California A. DONALD McEACHIN, Virginia LISA BLUNT ROCHESTER, Delaware DARREN SOTO, Florida TOM O'HALLERAN, Arizona ------ Professional Staff JEFFREY C. CARROLL, Staff Director TIFFANY GUARASCIO, Deputy Staff Director MIKE BLOOMQUIST, Minority Staff Director Subcommittee on Communications and Technology MIKE DOYLE, Pennsylvania Chairman JERRY McNERNEY, California ROBERT E. LATTA, Ohio YVETTE D. CLARKE, New York Ranking Member DAVID LOEBSACK, Iowa JOHN SHIMKUS, Illinois MARC A. VEASEY, Texas STEVE SCALISE, Louisiana A. DONALD McEACHIN, Virginia PETE OLSON, Texas DARREN SOTO, Florida ADAM KINZINGER, Illinois TOM O'HALLERAN, Arizona GUS M. BILIRAKIS, Florida ANNA G. ESHOO, California BILL JOHNSON, Ohio DIANA DeGETTE, Colorado BILLY LONG, Missouri G. K. BUTTERFIELD, North Carolina BILL FLORES, Texas DORIS O. MATSUI, California, Vice SUSAN W. BROOKS, Indiana Chair TIM WALBERG, Michigan PETER WELCH, Vermont GREG GIANFORTE, Montana BEN RAY LUJAN, New Mexico GREG WALDEN, Oregon (ex officio) KURT SCHRADER, Oregon TONY CARDENAS, California DEBBIE DINGELL, Michigan FRANK PALLONE, Jr., New Jersey (ex officio) C O N T E N T S ---------- Page Hon. Mike Doyle, a Representative in Congress from the Commonwealth of Pennsylvania, opening statement................ 2 Prepared statement........................................... 3 Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, opening statement..................................... 4 Prepared statement........................................... 5 Hon. Frank Pallone, Jr., a Representative in Congress from the State of New Jersey, opening statement......................... 6 Prepared statement........................................... 8 Hon. Greg Walden, a Representative in Congress from the State of Oregon, opening statement...................................... 9 Prepared statement........................................... 10 Witnesses Marcelo Claure, Executive Chairman, Sprint Corporation........... 12 Prepared statement........................................... 15 Answers to submitted questions............................... 237 John Legere, Chief Executive Officer, T-Mobile US................ 28 Prepared statement........................................... 30 Answers to submitted questions............................... 239 Chris Shelton, President, Communications Workers of America...... 52 Prepared statement........................................... 54 Answers to submitted questions............................... 253 Carri Bennet, General Counsel, Rural Wireless Association, Inc... 63 Prepared statement........................................... 65 Answers to submitted questions............................... 260 Doug Brake, Director of Broadband and Spectrum Policy, Information Technology and Innovation Foundation............... 78 Prepared statement........................................... 80 Phillip Berenbroick, Senior Policy Counsel, Public Knowledge..... 93 Prepared statement........................................... 95 Answers to submitted questions............................... 266 Submitted Material Letter from Andrea Rice, Missouri Farm Bureau, to Marlene H. Dortch, Secretary, Federal Communications Commission, submitted by Mr. Long.................................................... 151 Report of the Public Safety and Homeland Security Bureau, Federal Communications Commission, ``2017 Atlantic Hurricane Season Impact on Communications,'' August 2018, submitted by Mr. Pallone \1\ Letter of February 4, 2019, from John Legere to Ajit Pai, Chairman, Federal Communications Commission, submitted by Mr. McNerney....................................................... 154 Ex parte filing of February 4, 2019, by DLA Piper to Marlene H. Dortch, Federal Communications Commission, submitted by Mr. McNerney....................................................... 155 Letter of September 17, 2018, from Greg Ellis, Vice President, Environment and Energy Policy, Indiana Chamber of Commerce, to Marlene H. Dortch, Secretary, Federal Communications Commission, submitted by Mrs. Brooks........................... 159 ---------- \1\ The report has been retained in committee files and also is available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/ HHRG-116-IF16-20190213-SD007.pdf. Article of October 25, 2018, ``Why 5G is out of reach for more people than you think'' by Shara Tibken, CNET, submitted by Mr. Lujan.......................................................... 160 Report of the Vermont Department of Public Service, ``Mobile Wireless in Vermont,'' January 15, 2019, submitted by Mr. Welch 169 Map, 4G LTE coverage in Vermont, submitted by Mr. Welch.......... 179 Article of January 24, 2019, ``VT officials suspected cellphone coverage maps were too good to be true. They were right.,'' by April McCullum, Burlington Free Press, submitted by Mr. Welch.. 180 Maps, ``Distribution of Sprint and T-Mobile's postpaid and prepaid stores'' in Newark, NJ; Pittsburgh, PA; Toledo, OH; and Portland, OR, submitted by Mr. Doyle........................... 183 Article of February 11, 2019, ``T-Mobile's Compelling Case For Driving Innovation and Competition,'' by Henry Waxman and Billy Tauzin, Morning Consult, submitted by Mr. Doyle................ 187 Statement of Consumer Reports by George P. Slover, Senior Policy Counsel, February 13, 2019, submitted by Mr. Doyle............. 189 Blog post of February 12, 2019, ``Why INCOMPAS is Opposing the Merger Between T-Mobile and Sprint,'' by Chip Pickering, INCOMPAS, submitted by Mr. Doyle............................... 198 Report of the Democracy Reform Task Force, ``The Republican Culture of Corruption,'' by Mr. Sarbanes, Chair, September 18, 2018, submitted by Mr. Doyle \2\ Report of the Office of Inspections, Office of Inspector General, General Services Administration, ``Evaluation of GSA's Management and Administration of the Old Post Office Building Lease,'' January 16, 2019, submitted by Mr. Doyle \3\ Letter of February 12, 2019, from Mr. Cardenas, et al., to John Legere, Chief Executive Officer, T-Mobile US, Inc., and Michel Combes, Chief Executive Officer and President, Sprint Corp., submitted by Mr. Doyle......................................... 202 Letter from the National Diversity Coalition to Mr. Pallone, et al., submitted by Mr. Doyle.................................... 208 Letter of February 12, 2019, from Matthew Kandrach, President, and Gerard Scimeca, Vice President, Consumer Action for a Strong Economy, to Mr. Pallone, et al., submitted by Mr. Doyle. 213 Statement of J. Kenneth Blackwell, February 12, 2019, submitted by Mr. Doyle................................................... 215 Letter of February 12, 2019, from Colin A. Hanna, President, Let Freedom Ring, to Mr. Pallone, et al., submitted by Mr. Doyle... 217 Letter of February 12, 2019, from Beau Brunson, Senior Policy Advisor, Consumers' Research, to Mr. Pallone, et al., submitted by Mr. Doyle................................................... 219 Letter of February 12, 2019, from Richard M. Manning, President, Americans for Limited Government, to Mr. Pallone, et al., submitted by Mr. Doyle......................................... 227 Letter of February 13, 2019, from Grover G. Norquist, President, Americans for Tax Reform, to Mr. Doyle and Mr. Latta, submitted by Mr. Doyle................................................... 229 Letter of January 25, 2019, from Ms. Eshoo, et al., to Ajit Pai, Chairman, Federal Communications Commission, and Makan Delrahim, Assistant Attorney General, Antitrust Division, Department of Justice, submitted by Mr. Long................... 231 Letter of February 13, 2019, from Grover G. Norquist, President, Americans for Tax Reform, et al., to Mr. Doyle and Mr. Latta, submitted by Mr. Doyle......................................... 234 ---------- \2\ The report has been retained in committee files and also is available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/ HHRG-116-IF16-20190213-SD012.pdf. \3\ The report has been retained in committee files and also is available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/ HHRG-116-IF16-20190213-SD013.pdf. PROTECTING CONSUMERS AND COMPETITION: AN EXAMINATION OF THE T-MOBILE AND SPRINT MERGER ---------- WEDNESDAY, FEBRUARY 13, 2019 House of Representatives, Subcommittee on Communications and Technology, Committee on Energy and Commerce, Washington, DC. The subcommittee met, pursuant to call, at 10:00 a.m., in the John D. Dingell Room 2123, Rayburn House Office Building, Hon. Mike Doyle (chairman of the subcommittee) presiding. Members present: Representatives Doyle, McNerney, Clarke, Loebsack, Veasey, McEachin, Soto, O'Halleran, Eshoo, DeGette, Butterfield, Matsui, Welch, Lujan, Schrader, Cardenas, Pallone (ex officio), Latta (subcommittee ranking member), Shimkus, Scalise, Bilirakis, Johnson, Long, Flores, Brooks, Walberg, and Walden (ex officio). Staff present: Billy Benjamin, Systems Administrator; Jeffrey C. Carroll, Staff Director; Sharon Davis, Chief Clerk; Jennifer Epperson, FCC Detailee; Evan Gilbert, Press Assistant; Tiffany Guarascio, Deputy Staff Director; Alex Hoehn-Saric, Chief Counsel, Communications and Technology; Jerry Leverich, Counsel; Dan Miller, Policy Analyst; Joe Orlando, Staff Assistant; Tim Robinson, Chief Counsel; Chloe Rodriguez, Policy Analyst; Mike Bloomquist, Minority Staff Director; Robin Colwell, Minority Chief Counsel, Communications and Technology; Kristine Fargotstein, Minority Detailee, Communications and Technology; Margaret Tucker. Fogarty, Minority Staff Assistant; Stephen Keegan, Minority Intern, Communications and Technology; and Peter Kielty, Minority General Counsel. Mr. Doyle. Well, good morning. Before we get started, I want to express my condolences to Congresswoman Debbie Dingell on the loss of her husband, John. John was a dear friend and mentor to me and many members of this committee. His passion for oversight, accountability, legislative process, and his lifetime of public service is an example to all of us. His passing is a great loss to our Nation, to Congress, and this committee, which he loved so much. John, may you rest in peace. The Chair will now recognize himself for 5 minutes. OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA Welcome to the Subcommittee on Communication and Technology's hearing on ``Protecting Consumers and Competition: An Examination of the T-Mobile/Sprint Merger.'' This hearing is noteworthy because the last time a merger hearing was had before this subcommittee was almost 9 years ago. And in that time there have been numerous mergers within this subcommittee's jurisdiction that have gone without a hearing. I believe it is the duty of this subcommittee to allow our members to publicly discuss and debate the merits of these transactions and to question the relevant stakeholders. The merger before us today is between two of our country's national wireless providers, T-Mobile and Sprint. These companies have acted as disrupters, competitors, and low-cost options in the wireless marketplace. T-Mobile's ``uncarrier`` strategy has ended anticonsumer practices such as data caps, restrictive contracts and much more. They have also worked hard to build a robust national network that by some accounts is the fastest in the Nation. For its part, Sprint has been a leader in roaming agreements for rural providers and wholesale access for prepaid and Lifeline providers. Sprint has worked hard to bring its networks to within one percent of Verizon's in terms of network reliability, or so their commercials say so. Consumers have also benefited from Sprint positioning itself as the best value. They are offering a plan right now where new customers can get a year of free service when they switch from another carrier, which sounds amazing. However, this hearing isn't about the benefits that both of your companies have brought to the market. It is about the extraordinary impact that your combined company could have on the public and the marketplace if this merger goes through. We will hear today from the Communication Workers of America, from the Rural Wireless Association, and Public Knowledge. They claim that this merger will have negative impacts on low-income consumers, rural providers, and jobs in the wireless industry. CWA's testimony suggests that this merger will result in up to 30,000 job losses in the industry and a reduction in industry pay by as much as $3,000 per employee. The Rural Broadband Association's testimony argues that rural consumers will pay more. They claim that Sprint charges 20 times less than T-Mobile or other national carriers for roaming agreements. These agreements allow customers of rural carriers who build their own networks in the most rural communities to use their phones throughout the country. What guarantees do rural providers have that they won't face increased costs if T- Mobile doesn't adopt Sprint's practices? And Public Knowledge's testimony states that consumer prices will go up due to the reduction in the number of national carriers from four to three. They argue that the merger would hit low-income consumers the hardest because the number of carriers offering wholesale access would drop from three to two. Sprint, AT&T, and T-Mobile sell access to their networks to prepaid and Lifeline providers who then sell that service under their own brands. What remedy do these carriers or their customers have if the New T-Mobile decides that it wants to get out of the wholesale business or drastically raise rates? To that end, the FCC found in their Communications Marketplace Report that the wireless market concentration was currently at 3,100 HHI. HHI measures how competitive a market is with a higher number meaning it is less competitive. The Justice Department's Horizontal Merger Guidelines state that a market with an HHI above 2,500 is highly concentrated. So we really aren't starting from a great spot. An increase of 200 points would raise significant concerns about competition. This merger is expected to result in a market power increase of 280 points for the postpaid market and 2,014 points for the prepaid market. That would take the prepaid market from where it is right now at 2,467, which is just under DOJ's threshold, to 4,481, a level that raises lots of red flags. These kinds of numbers have historically resulted in higher prices for consumers, less competition, and less innovation. I appreciate both executives' statement that they believe that this merger will benefit consumers and result in lower prices and their commitments to an accelerated deployment of 5G and promises of expanded rural broadband. These are national objectives that are important to me and many members of this committee. However, I have seen a lot of mergers in this industry and others and it is hard to think of one where consolidation didn't result in people losing their jobs, prices going up, and innovation being stifled. I look forward to hearing from the testimony from our two telephone companies that wish to merge and from the other panelists. [The prepared statement of Mr. Doyle follows:] Prepared statement of Hon. Mike Doyle Before we get started, I want to express my condolences to Congresswoman Dingell on the loss of her husband. John was a dear friend and mentor to me and many here. His passion for oversight, accountability, legislative progress, and his lifetime of public service is an example to us all. His passing is a great loss to our Nation, the Congress, and this committee which he loved so much. Welcome to the Subcommittee on Communication and Technology's hearing on Protecting Consumers and Competition, an Examination of the T-Mobile/Sprint Merger. This hearing is noteworthy because the last merger hearing before this subcommittee took place nearly 9 years ago. In that time, there have been numerous mergers within this subcommittee's jurisdiction that have gone without a hearing. I believe it is the duty of this subcommittee to allow our Members to publicly discuss and debate the merits of these transactions and to question the relevant stakeholders. The merger before us today is between two of our country's national wireless providers, T-Mobile and Sprint. These companies have acted as disruptors, competitors, and low-cost options in the wireless marketplace. T-Mobile's ``uncarrier'' strategy has ended anticonsumer practices such as data caps, restrictive contracts, and much more. They have also worked hard to build a robust national network that, by some accounts, is the fastest in the Nation. For its part, Sprint has been a leader in roaming agreements for rural providers--and wholesale access for pre- paid and Lifeline providers. Sprint has worked hard to bring its network to within one percent of Verizon's in terms of network reliability--or so their commercials tell me! Consumers have also benefited from Sprint positioning itself as the best value. They are offering a plan right now where new customers can get a year of free service when they switch from another carrier, which sounds amazing. However, this hearing isn't about the benefits that both of your companies have brought to the market. It is about the extraordinary impact that your combined company could have on the public and the marketplace if this merger goes through. We will hear today from the Communication Workers of America, the Rural Wireless Association, and Public Knowledge. They claim that this merger will have negative impacts on low- income consumers, rural providers, and jobs in the wireless industry. C-W-A's testimony suggests this merger will result in up to thirty thousand job losses in the industry--and a reduction in industry pay by as much as three thousand dollars per employee. The Rural Broadband Association's testimony argues that rural consumers will pay more. They claim that Sprint charges 20 times less than T-Mobile or the other national carriers for roaming agreements. These agreements allow customers of rural carriers, who build their own networks in the most rural communities, to use their phones throughout the country. What guarantee's do rural providers have that they won't face increased costs if T-Mobile doesn't adopt Sprint's practices? And Public Knowledge's testimony states that consumer prices will go up due to the reduction in the number of national carriers from 4 to 3. They argue that the merger would hit low-income consumers the hardest because the number of carriers offering wholesale access will drop from 3 to 2. Sprint, AT&T, and T-Mobile each sell access to their networks to pre-paid and Lifeline providers, who then sell that service under their own brands. What remedy do these carriers, or their customers have if the new T-Mobile decides it wants to get out of the wholesale business or drastically raise rates? To that end, the FCC found in their Communications Marketplace Report that wireless market concentration was currently at 3,100 H-H-I. H-H-I measures how competitive a market is--with a higher number indicating less competition. The Justice Department's horizontal merger guidelines state that a market with an H-H-I above 2,500 is highly concentrated--so we really aren't starting from a great spot. An increase of 200 points would raise significant concerns about competition. This merger is expected to result in a market power increase of 280 points for the postpaid market and 2,014 points for the pre-paid market. That would take the pre-paid market from where it is now at 2,467, which is just under the D-O-J's threshold, to 4,481--a level that raises lots of red flags. These kinds of numbers have historically resulted in higher prices for consumers, less competition, and less innovation. I appreciate both executives' statements that they believe that this merger will benefit consumers and result in lower prices--and their commitments to an accelerated deployment of 5G and promises of expanded rural broadband. These are national objectives that are important to me and many members of this committee. However, I've seen a lot of mergers in this industry and others, and it's hard to think of one where consolidation didn't result in people losing their jobs, prices going up, and innovation being stifled. I look forward to hearing from the panel. Mr. Doyle. And with that I yield to the ranking member, Mr. Latta, for 5 minutes. OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO Mr. Latta. Well, thank you, Mr. Chairman. And if I could just take a point of personal privilege also to express my deepest sympathies to our friend and colleague Debbie Dingell on the loss of Chairman Dingell. And the chairman loved this committee. You know, this room is named after him. And I had the privilege of getting to know him in my days not only on this committee, but when I first got to Congress. Again he loved this committee, he loved this House, but most of all he loved his district, the State of Michigan, and all that he did for it. So with that, I wish the Dingells my deepest sympathies on the loss of the chairman. And again, Mr. Chairman, thank you very much for convening our panel of witnesses today. And to our witnesses, thanks very much for being here. We appreciate your time. I look forward to hearing your expertise and different perspectives as we discuss the future of the telecommunications marketplace and learn more about the proposed merger of T-Mobile and Sprint. With any talk of merger comes a long list of potential benefits and drawbacks, and this one is no different. I understand from the CEOs of T-Mobile and Sprint, who are with us today, that there are many proconsumer outcomes possible if the merger is approved. These potential benefits range from providing mobile broadband to millions of unserved and underserved Americans living in rural areas to helping the United States win the global competitiveness race to 5G. But I also understand from several of the witnesses representing groups here today that the combined company could pose some harm to consumers. Some of the potential drawbacks include the possibility to eliminate jobs or increase the price that consumers pay for access to wireless service. Our role in this committee is not to weigh the merits of these arguments and determine if this merger is in the public interest. Congress gave that role to the FCC, who along with the DOJ performs a more traditional antitrust assessment on the merger, and these two agencies will ultimately determine if the merger is going to be approved. Our role in this subcommittee is to provide policies that advance the telecommunications market, including expanding access to broadband to all Americans. One way to do this, especially for rural America and many areas in my district, is to build 5G networks. In areas where the broadband is not currently deployed, 5G networks can help connect Americans to high-speed internet for the very first time. And, in areas where broadband is already available, 5G networks provide a competitive alternative. This proposed merger reportedly will promote these objectives, and I look forward to hearing more about the ways in which companies plan on doing that. But I also am interested in hearing from all of our witnesses today. This will be an enlightening discussion. The final decision about whether this proposed merger of these two companies is in the public interest is up to the FCC. Again I look forward to hearing from all of our witnesses today and your testimony and your responses to our questions. And, Mr. Chairman, I appreciate the hearing today, and I yield back the balance of my time. [The prepared statement of Mr. Latta follows:] Prepared statement of Hon. Robert E. Latta Good morning, and welcome to our panel of witnesses. Thank you for making the time to be here today. I look forward to hearing your expertise and different perspectives as we discuss the future of the telecommunications marketplace and learn more about the proposed merger of T-Mobile and Sprint. With any talk of a merger comes a long list of potential benefits and drawbacks, and this one is no different. I understand from the CEOs of T-Mobile and Sprint, who are here with us today, that there are many proconsumer outcomes possible if the merger is approved. These potential benefits range from providing mobile broadband to millions of unserved or underserved Americans living in rural areas to helping the United States win the global competitiveness race to 5G. But, I also understand from several of the other witnesses representing groups here today that the combined company could pose some harm to consumers. Some of these potential drawbacks include the possibility to eliminate jobs or increase the price that consumers pay for access to wireless service. Our role on this subcommittee is not to weigh the merits of these arguments and determine if this merger is in the public interest. Congress gave that role to the FCC who, along with DOJ, performs a more traditional antitrust assessment on the merger, and these two agencies will ultimately determine if the merger is approved. Our role on this subcommittee is to promote policies that advance the telecommunications market, including expanding access to broadband to all Americans. One way to do this, especially for rural America and many areas in my district, is to build 5G networks. In areas where broadband is not currently deployed, 5G networks can help connect Americans to high-speed Internet for the first time. And, in areas where broadband is already available, 5G networks will provide a competitive alternative. This proposed merger reportedly will promote those objectives, and I look forward to hearing more about the ways in which the companies plan on doing that. But, I am also interested in learning about some of the potential unintended consequences of the merger. This will be an enlightening discussion, but that is all it will be. The final decision about whether this proposed merger of these two companies is in the public interest is up to the FCC. I look forward to hearing your testimony and responses to our questions. Mr. Doyle. The gentleman yields back. The Chair now recognizes Mr. Pallone, chairman of the full committee, for 5 minutes for his opening statement. OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY Mr. Pallone. Thank you, Chairman Doyle. Today is our first hearing since the loss of our chairman, John Dingell. It is fitting that this room is named the John Dingell Room. After all, over 28 years as the top Democrat on this committee and over his nearly 60 years in the House, he fought to ensure the committee maintained its broad jurisdiction, had deliberative debates, followed regular order, conducted robust oversight, and produced legislation in the public interest. And in keeping with John's tradition, today we focus our microscope on the proposed merger of two of the four large nationwide wireless phone carriers, T-Mobile and Sprint. Collectively, these companies directly employ more than 80,000 people and serve more than 130 million customers. These companies are no stranger to merger discussions. In 2011, a struggling T-Mobile was almost purchased by AT&T but was blocked by the Obama administration, and T-Mobile nevertheless went on to flourish. T-Mobile and Sprint attempted to merge 2 years later, but abandoned the deal after competition concerns were raised by regulators. Now once more the parties are seeking approval to merge. This hearing marks the first time in 8 years that the committee has met to evaluate the consequences of a merger. For too long the House and this committee paid little attention to that responsibility, but now we resume the practice of reviewing major acquisitions so we can fulfill our obligation for the people to determine how this proposed consolidation will affect consumers, workers, public safety and network resiliency, competition, and future innovation. For the last 8 years, major industry consolidation occurred without significant oversight, and the consequences of that have been borne by consumers and hardworking Americans. In the past we have seen mergers jack up consumer prices, cut away meaningful choices, and outsource, undercut, and eviscerate good-paying jobs. We have seen previous merger conditions that weren't met or weren't enforced. We have seen the public interest in all its forms undermined, and that is why we must look carefully at these issues before a merger is approved. In this case, the transaction is currently being reviewed by the FCC as well as the Department of Justice. As part of our oversight responsibility we must make sure that the FCC is carefully reviewing the facts and keeping consumers' best interests in mind when deciding the fate of the merger. I know we are going to have many hard questions today because the facts surrounding this merger are so much in dispute. For example, Mr. Legere says that New T-Mobile won't raise consumer prices. But others say his company's filings acknowledge consumers could see price hikes, some argue by up to 15 percent, with the merger being particularly hard on the poorest consumers. How can we be sure that consumers who can least afford to pay more are not harmed by the merger? T-Mobile filed the letter committing not to raise prices with the FCC. Putting aside whether that is sufficient, there is a serious question as to whether the Trump FCC would be willing to impose any conditions in a merger order. Mr. Legere says that the merger of T-Mobile and Sprint will be a net job creator on day one, but the Communications Workers of America say we should expect the loss of 30,000 jobs. The truth will have long-term implications for American families across the country. And Mr. Legere says that New T-Mobile will create a world-class 5G network, but opponents say that both T- Mobile and Sprint have committed to investors to deploying 5G networks as separate and independent companies. 5G deployment is important, obviously, and valuable to consumers and the economy, and whether the merger expedites 5G rollout merits consideration. And Mr. Legere also says that the merger of T-Mobile and Sprint will help New T-Mobile compete with AT&T and Verizon, all while new entrants and cable companies begin to compete in wireless. But smaller carriers worry the merger might snuff out existing and new competitive players that rely on wholesale access to T-Mobile and Sprint's networks. To this end, we must understand not only how the merger affects the current wireless marketplace but also the marketplace of the future. And, finally, Mr. Legere says that the merger of T-Mobile and Sprint will help New T-Mobile build out robust rural broadband, while others argue that New T-Mobile will shut down 25,000 cell towers across the country. And I would like to understand whether this is accurate and whether it will have a negative effect on the resiliency of the wireless network during disasters. So, Mr. Chairman, there are a lot of conflicting opinions on the impact of this merger which is why this hearing is so important and I hope that Members will get the straight answers here today. And I yield back. [The prepared statement of Mr. Pallone follows:] Prepared statement of Hon. Frank Pallone, Jr. Today is our first hearing since the loss of our chairman, John Dingell. It is fitting that this room is named the John D. Dingell Room. After all, over 28 years as the top Democrat on this committee and over his nearly 60 years in this House, he fought to ensure the committee maintained its broad jurisdiction, had deliberative debates, followed regular order, conducted robust oversight and produced legislation in the public interest. We will all have an opportunity to remember and pay tribute to our chairman this Friday morning at a special committee meeting. In keeping with his tradition, today, we focus our microscope on the proposed merger of two of the four large, nationwide wireless phone carriers: T-Mobile and Sprint. Collectively, these companies directly employ more than 80,000 people, and serve more than 130 million customers. These companies are no stranger to merger discussions. In 2011, a struggling T-Mobile was almost purchased by AT&T, but was blocked by the Obama administration, and T-Mobile nevertheless went on to flourish. T-Mobile and Sprint attempted to merge 2 years later but abandoned the deal after competition concerns were raised by regulators. Now, once more, the parties are seeking approval to merge. This hearing marks the first time in 8 years that the committee has met to evaluate the consequences of any merger. For too long, this House and this committee shirked that responsibility. But now, we resume the practice of reviewing major acquisitions, so we can fulfill our obligation for the people to determine how this proposed consolidation will affect consumers, workers, public safety and network resiliency, competition, and future innovation. For the last 8 years major industry consolidation occurred without any oversight, and the consequences of that negligence have been borne by consumers and hardworking Americans. In the past, we've seen mergers jack up consumer prices, cut away meaningful choices, and outsource, undercut, and eviscerate good paying jobs. We've seen previous merger conditions that weren't met or weren't enforced. We've seen the public interest, in all of its forms, undermined, and that is why we must look carefully at these issues before a merger is approved. In this case, the transaction is currently being reviewed by the Federal Communications Commission (FCC) as well as the Department of Justice. As part of our oversight responsibility, we must make sure that the FCC is carefully reviewing the facts and keeping consumers' best interests in mind when deciding the fate of the merger. I know we're going to have many hard questions today, because the facts surrounding this merger are so in dispute. For example, Mr. Legere says that New T-Mobile won't raise consumer prices. But others say his company's filings acknowledge consumers could see price hikes-some argue by up to 15 percent-with the merger being particularly hard on the poorest consumers. How can we be sure that consumers who can least afford to pay more are not harmed by the merger? T-Mobile filed a letter committing not to raise prices with the FCC. Putting aside whether that is sufficient, there is a serious question as to whether the Trump FCC would be willing to impose any conditions in a merger order. Mr. Legere says that the merger of T-Mobile and Sprint will be a net job creator on day one, but the Communications Workers of America say we should expect a loss of 30,000 jobs. The truth will have long term implications for American families across the country. Mr. Legere says that New T-Mobile will create a world-class 5G network, but opponents say that both T-Mobile and Sprint have committed to investors to deploying 5G Networks as separate, and independent, companies. 5G deployment is important and valuable to consumers and the economy and whether the merger expedites 5G roll-out merits consideration. Mr. Legere says that the merger of T-Mobile and Sprint will help New T-Mobile compete with AT&T and Verizon all while new entrants and cable companies begin to compete in wireless. But smaller carriers worry the merger might snuff out existing and new competitive players that rely on wholesale access to T- Mobile and Sprint's networks. To this end, we must understand not only how the merger affects the current wireless marketplace but also the marketplace of the future. And Mr. Legere says that the merger of T-Mobile and Sprint will help New T-Mobile buildout robust, rural broadband, while others argue New-T-Mobile will shutdown 25,000 cell towers across the country. I would like to understand whether this is accurate and whether it will have a negative effect on the resiliency of the wireless network during disasters. There are a lot of conflicting opinions on the impact of this merger--which makes this hearing so important. I hope that Members will get the straight answers here today. I yield back. Mr. Doyle. The gentleman yields back. The Chair now recognizes Mr. Walden, ranking member of the full committee, for 5 minutes for his opening statement. OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON Mr. Walden. Thank you, Mr. Chairman. And as you all have said, I know we all have the Dingell family in our thoughts and our prayers on this difficult week. John Dingell taught us all how to be legislators. He was a legend in many respects, and nobody, despite everybody's attempt, has ever been able to do the yes-or-no questioning as effectively as Mr. Dingell did. We have all tried to emulate that. And so he is missed. He will never be forgotten. And I am glad we are all honoring his life, his work, his service, and remembering Debbie in our prayers. Mr. Chairman, I would like to echo my colleagues' warm welcome to all of our witnesses today and to thank you all for making the time to come share your thoughts with the subcommittee. We have generally avoided hearings focused on specific transactions in an effort to allow the regulators who are actually responsible for assessing them to do their work as much as possible free from intense political influence. It has been my hope that experts at the FCC and the Department of Justice who as we speak are reviewing this transaction and its potential impact on public interest and competition will continue their analysis without undue political pressure. Now in a district like mine which would stretch from the Atlantic to Ohio, it is a district that gives new meaning to word ``rural.'' We have coverage gaps that engulf huge areas of the map in places with as few as one person for every square mile. For Americans in some of these areas who have been awaiting the promise of broadband for far too long with the connectivity, educational, and economic empowerment it brings, any news on this front is great news for celebration. So we have been appreciative of T-Mobile's rapid build-out efforts in Central Oregon and as a result of its newly acquired 600 megahertz licenses. With this committee's bipartisan work last year to keep the repack on track with an additional billion dollars for reimbursement of broadcasters' moving expenses, more and more districts are realizing the benefits of groundbreaking incentive auction that we made possible through the action of this committee. The hope is finally becoming reality in many of our areas of the country and I think it is well worth noting T-Mobile's efforts so far in delivering on its promises and in some cases ahead of schedule. Turning to the particular transaction at issues today, experts including some of our witnesses are painting some very different pictures of the potential effects of this proposed merger. Going forward we do want to see consumers paying less and getting more data. We want to see more choices and we want to see intensified competition in the wireless and in-home broadband markets. We want to see faster rural development and we want to see better service. And we need America to lead in the global race on 5G deployment, reaping economic benefits and transformative services for all Americans. As we consider the testimony of our witnesses, we need to take a holistic view. Instead of focusing on a particular metric like those who insist the Government must intervene to preserve four nationwide wireless operators at all costs, we have to consider scale and operational efficiencies in that equation and the rapidly changing characteristics of the wireless marketplace, especially the convergence of functionality with nontraditional competitors such as global and satellite operators. With almost 50 percent of digital video now consumed on smart phones, wireless service is not what it once was. And with the advent of 5G, the capabilities are evolving at an exponential rate. So it is important for us as legislators to adjust our expectations to this new reality and resist the call for artificial market constraints that may not make any sense in a 5G world. I look forward to the witnesses today and their perspectives on each of these issues and I want us to be the world's fastest and best 5G ecosystem, secure, affordable and accessible to every American. [The prepared statement of Mr. Walden follows:] Prepared statement of Hon. Greg Walden I'd like to echo my colleagues' warm welcome to all the witnesses here today and thank you all for making the time to come share your thoughts with the subcommittee today. We have generally avoided hearings focused on any specific transaction in an effort to allow the regulators who are responsible for assessing them to do their work, as much as possible, free from intense political influence. It is my hope the experts at the FCC and DOJ--who as we speak are reviewing this transaction, and its potential impact on the public interest and competition--will continue their analysis in this vein. In a district like mine that gives new meaning to the word ``rural,'' coverage gaps engulf huge areas of the map, in places with as few as one person for every square mile. For Americans in some of these areas, who have been awaiting the promise of broadband for far too long, with the connectivity, educational and economic empowerment it brings, any news on this front is cause for great celebration. So we have been appreciative of T-Mobile's rapid build out efforts in Central Oregon as a result of its newly acquired 600 MHz licenses. With this committee's bipartisan work last year to keep the repack on track with an additional $1 billion for reimbursement of broadcasters' moving expenses, more and more districts are realizing the benefits of the groundbreaking incentive auction that we made possible. The hope is finally becoming a reality in these areas. And I think it's well worth noting T-Mobile's efforts so far in delivering on its promises, in some cases ahead of schedule. Turning to the particular transaction at issue today, experts including some of our witnesses here are painting some very different pictures of its potential effects. Going forward, we want to see consumers paying less for more data. We want to see more choices and intensified competition in the wireless and in-home broadband markets. We want to see faster rural deployment and better service. And we need America to lead in the global race to 5G, reaping economic benefits and transformative services for all Americans. As we consider the testimony of these witnesses, we need to take a holistic view, instead of focusing on a particular metric--like those who insist that the Government must intervene to preserve four nationwide wireless operators at all costs. We have to consider scale and operational efficiencies in that equation, and the rapidly changing characteristics of the wireless marketplace, especially the convergence of functionality with nontraditional competitors such as cable and satellite operators. With almost 50 percent of digital video now consumed on smartphones, wireless service is not what it once was, and with the advent of 5G the capabilities are evolving at an exponential pace. So it's important for legislators to adjust our expectations to this reality and resist the call for artificial market constraints that may not make any sense in a 5G world. I look forward to hearing the perspectives of each of our witnesses as we consider the current state of the marketplace overall and how best to reach the objective so important to us all--the world's fastest and best 5G ecosystem, secure, affordable, and accessible to every American. Mr. Walden. With that I would yield the balance of my time to the gentleman from Missouri, Mr. Long. Mr. Long. Thank you. I would like to take a point of personal privilege here for just a minute too, maybe stop the clock for me for a second if we could, on John Dingell. Two planeloads of us loaded up yesterday morning out at Andrews to attend John's funeral in Dearborn, and we circled Detroit for about an hour, after an hour delay here, and were told we had 5 minutes of fuel left or we could go to Pittsburgh and refuel and go back and we would miss the funeral. So I know that Anna Eshoo was on that flight; Mr. Walden that just yielded to me, he was chairman and now ranking member of the committee; Chairman Upton, who was Committee E&C and had his office across from John for years. He and John Lewis, who is a legend in his own time, were supposed to speak at the funeral, and Speaker Pelosi happened to be on the same flight, or I happened to be on the same plane with them. So at 30,000 feet, John Lewis led us in a tribute and we had our own service for John Dingell at 30,000 feet yesterday, and it was quite moving. Chairman Upton spoke, Speaker Pelosi, John led us in prayer and spoke, and it was a pretty moving tribute. So we did what we did to get to Big John's funeral. I was born in 1955. John Dingell was sworn into Congress in 1955. He followed his father. His wife, Debbie, of course follows him today. She is doing an excellent job, and thoughts and prayers go out to Debbie and the family. With that, I will start my minute that Greg yielded to me. Today's hearing gives us the opportunity to hear about how the American public can benefit from the proposed merger of T- Mobile and Sprint. The U.S. telecommunications market has changed dramatically in recent years. In order to foster innovation and growth in any industry it is important that we ensure that there is a fair and competitive marketplace. I am excited to hear how the third- and fourth-largest wire carriers in the United States plan to combine their spectrum resources to deliver a more robust, nationwide, wireless broadband network for consumers, drive innovation and investment, and better compete with the top two wireless providers. Investments in next generation broadband networks are important to reach unserved communities like mine in Southwest Missouri and help close the digital divide. I look forward to hearing from our witnesses on how the New T-Mobile drive for innovation will help close that digital divide, benefit the U.S. economy to provide consumers with more choices at lower cost. And I would like to submit for the record two documents: an op-ed from the Missouri Times written by the head of the Missouri Farm Bureau demonstrating support for the merger in Missouri, and also a letter in support of the merger to the FCC from myself and several of my colleagues. And with that I yield back. Mr. Doyle. Without objection, so ordered. [The information appears at the conclusion of the hearing.] Mr. Walden. And, Mr. Chairman, I will yield back, but I just want to say for the record we have another subcommittee going on in important health issues upstairs, so some of us will have to go up and back. But, again, thank you for being here. Mr. Doyle. I thank the ranking member. The Chair would like to remind Members that, pursuant to committee rules, all Members' written opening statements shall be made part of the record. I would now like to introduce our witnesses for today's hearing. First, we will have Mr. Marcelo Claure, executive chairman of Sprint Corporation; next, Mr. John Legere, chief executive officer and president of T-Mobile US; next, Mr. Chris Shelton, president of the Communications Workers of America; then we will have Ms. Carri Bennet, general counsel of the Rural Wireless Association; Mr. Doug Brake, director of Broadband and Spectrum Policy for the Information Technology and Innovation Foundation; and last but not least, Mr. Phillip Berenbroick, senior policy counsel with Public Knowledge. I want to thank all the witnesses for joining us today. We look forward to your testimony. At this time, the Chair will recognize each witness for 5 minutes to provide their opening statement, but before we begin I want to explain our lighting system. In front of you, of the witnesses, is a series of lights. The light will initially be green at the start of your opening statement. The light will turn yellow when you have 1 minute remaining, and please wrap up your testimony at that point. The light turns red when your time has expired. Mr. Claure, you are now recognized for 5 minutes. STATEMENTS OF MARCELO CLAURE, EXECUTIVE CHAIRMAN, SPRINT CORPORATION; JOHN LEGERE, CHIEF EXECUTIVE OFFICER, T-MOBILE US; CHRIS SHELTON, PRESIDENT, COMMUNICATIONS WORKERS OF AMERICA; CARRI BENNET, GENERAL COUNSEL, RURAL WIRELESS ASSOCIATION, INC.; DOUG BRAKE, DIRECTOR OF BROADBAND AND SPECTRUM POLICY, INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION; AND PHILLIP BERENBROICK, SENIOR POLICY COUNSEL, PUBLIC KNOWLEDGE STATEMENT OF MARCELO CLAURE Mr. Claure. Before we begin, I want to pay my respect to Chairman Dingell and his longstanding service to his country. It is an honor to be here today and I am grateful for the opportunity to speak with you. I would like to take the opportunity to explain why Sprint's proposed merger with T- Mobile will be great for the American consumers, will be great for Sprint employees, and will be great for our country. I will go into details in a moment, but before I do so I want to tell you a little about me. First, I am an immigrant. I immigrated to the United States as a young man from Bolivia. I had very little money. I went to small university in Boston and I received a priceless education. Second, I am an entrepreneur. After I graduated college I founded a company called Brightstar. I started selling phones out of my car and I gradually grew Brightstar into the largest mobile phone distribution and supply chain services company in the world. We worked very hard and grew over $10 billion in sales and thousands of employees. I am most proud that we made Brightstar the largest Hispanic-owned business in the history of our country. In 2014, I sold Brightstar to Softbank, immediately after that I became Sprint's CEO. At that time, Sprint, a Kansas company, was near financial distress. In 2013, the company lost $5 billion and in the previous 10 years Sprint lost over $25 billion and we had approximately $31 billion in debt. A great company with tens of thousands of jobs across the U.S. was at risk. Beginning in 2014, we undertook a massive and painful transformation of the company. We worked hard the same way we did at Brightstar, from the ground up. We reduced our expenses close to $6 billion through cost reductions, employee layoffs, and some unwanted transfer to jobs overseas. We didn't want to, but we had to. Today, Sprint is no longer in financial dire straits, but we face some significant challenges. Despite our success we were unable to fix our main challenge, the quality of our network. We could not fix our network because of our poor financial condition and our lack of low band spectrum. Because of our network quality, Sprint still struggles to attract lots of new customers, and many customers that we are acquiring leave at a faster pace than our competitors. Customers today are not willing to sacrifice quality. Today, the U.S. wireless market has become a duopoly. Verizon and AT&T have close to 70 percent market share and they control 93 percent of the cash flow generated from the industry. As a result, it is very hard to invest and compete at the same level. Today, we are at a technological inflection point. Over the next few years 5G is coming, a new standard of connectivity. It is going to completely change the way we connect and the way we live our lives. But Sprint doesn't have the resources to build a 5G network to provide the necessary competition against the AT&T and Verizon duopoly. We estimate that we will need close to 20 to 25 billion dollars just to offer 5G in our limited coverage area. And because we don't generate any cash flow, we would have to raise more debt and to pay for that debt we would have to increase our prices to the American consumer. The only company that can build the world's best 5G network is a combination of Sprint and T-Mobile and we can only do this if this merger is approved. As a combined company, we are committed to invest nearly $40 billion over the next 3 years to build the world's best 5G network with nationwide coverage. How can we do this together? It is simple. It is the marriage of two necessary and complementary 5G pieces. Sprint has high capacity spectrum which have acquired over many years. T-Mobile has brought national coverage spectrum. It is capacity plus coverage. Today, we can build the world's most advanced, covering every corner in America in urban, suburban, and rural areas. We cannot take lightly that America needs to lead the world in 5G. China has made it a priority to win the 5G race. They are investing billions. When a country has the best network with the latest technology it brings massive economic stimulus, explosive job growth, and a new wave of entrepreneurs. America is a land of innovators and disrupters. Let's keep it this way. My story validates this. Letting another country take the leadership away from the U.S. will cost irreparable damage. This is an opportunity for a lifetime. In addition, yes, we are committed to lower prices. When we merger two companies we will create eight times the network capacity that we would have on our own. We will have to beat AT&T and Verizon on price to fill this capacity. This makes financial sense, it is good business, and most importantly it is our commitment. Lastly, it is true that most mergers do not create jobs. This merger is the opposite. This is a growth story. This new company will create new jobs, blue-collar, white-collar jobs, jobs in urban, suburban, and rural America. We will need skilled network engineers, construction crews, enterprise sales teams, call center jobs that we are going to bring back from overseas, and new sales reps for the new stores that will be opening. I can't thank you enough for allowing me to speak today. As I mentioned, I am grateful to this country, and as an American entrepreneur I hope you will approve this merger. I look forward to answering your questions. [The prepared statement of Mr. Claure follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you very much. The Chair now recognizes Mr. Legere for 5 minutes. STATEMENT OF JOHN LEGERE Mr. Legere. Thank you, Chairman Doyle, Ranking Member Latta, and other members of the subcommittee for inviting Marcelo and me and the rest of the panel here today. Before I begin my remarks, let me offer condolences to Congresswoman Dingell on the loss of her husband, John Dingell, a towering figure in the House and a leader in this committee. I appreciate the opportunity to tell you about the tremendous benefits of the proposed T-Mobile/Sprint merger and the progress we are making towards making it a reality. So, first, what will this merger deliver? It will deliver a supercharged uncarrier which can ensure U.S. leadership in 5G, increase competition, and create American jobs. First and foremost, the New T-Mobile will make sure America wins the global 5G race. This is so important because 5G will unlock new capabilities that will fuel innovation and job creation well beyond anything we have seen so far. 5G will completely transform the way Americans live, work, travel, and play. 5G means real-time navigation, downloading a movie in seconds, instant language translation, and much more. Nearly every business in America will be able to use 5G to revolutionize how they create and deliver goods and services. Best of all, with this transaction the benefits of 5G won't just flow to big cities. Combining Sprint and T-Mobile will produce a faster, broader, deeper network that is truly nationwide. It will benefit consumers and businesses everywhere including rural America. Neither company could achieve this on its own. Second, New T-Mobile will have the capital, the scale, and the network to supercharge competition, unleashing significant benefits for consumers that includes keeping prices low. The combined company will continue the T-Mobile tradition of disrupting the wireless space and we will disrupt in-home broadband with new wireless broadband options freeing millions from the stranglehold of big cable. Budget-conscious customers have the most to gain because they consume the most data. They have the most to gain when data costs less. It will be a huge leap across the digital divide. Our opponents are wrong when they claim that the merger will lead to higher prices. In fact, the opposite is true. Consumers will win with lower prices and better services. How? Our costs will drop sharply and our network capacity will expand tremendously. I am so confident that the merger will lower prices that we are willing to put our money where our mouth is. Last week we committed in writing to regulators that we will make available the same or better rate plans as those offered by T-Mobile or Sprint for the next 3 years. Third, this merger will be a tremendous jobs creator at New T-Mobile and across our country. Our merger will be jobs- positive from day one and going forward. The build-out of our 5G network, investment in new customer care centers, and expansion into new businesses like video distribution, broadband, and enterprise services means thousands more jobs than the two standalone companies would have needed. In the first year we will have thousands more employees than the standalone companies combined. By 2024 we will have 11,000 more employees. Our critics are wrong about the impact on jobs. I have looked at their arguments and supposed analyses and they do not make sense. They ignore the facts. They don't account for any areas where jobs will grow, like network integration or new customer call care centers. And by the way we have heard this story before. They said we would cut 10,000 jobs when T-Mobile merged with MetroPCS. In fact, we expanded jobs by thousands. Let me say this to every T-Mobile and Sprint employee working in one of our stores today, each of you will be offered a job with the New T-Mobile. Our opponents have also lobbed false allegations that this transaction will allow Huawei and ZTE into U.S. networks. Let me be clear. There is no Huawei or ZTE equipment in our network today and there never will be. Not today, not tomorrow, not ever. Many have already recognized the tremendous benefits of this merger. CFIUS and Team Telecom have completed the national security review and approved the transaction. Sixteen of 19 States have completed their reviews and found the transaction to be in the public interest, and nearly 200 organizations, companies, government officials, and community leaders publicly support the transaction. I am particularly honored that Congresswoman Eshoo, Congressman Schrader, Congressman Long, and 10 other Members have signed a bipartisan letter of support. To those that doubt us, I would simply say this: We are the uncarrier. My management team and I believe on delivering on our promises and we know if we do not we will lose the credibility and the trust of our customers and employees. I can promise to you the New T-Mobile team will deliver for consumers, American workers, and for our country. Thank you, and I look forward to answering your questions. [The prepared statement of Mr. Legere follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you, Mr. Legere. The Chair now recognizes Mr. Shelton for 5 minutes. STATEMENT OF CHRIS SHELTON Mr. Shelton. Chairman Doyle, Ranking Member Latta, Chairman Pallone, Ranking Member Walden, and members of the committee, first, let me offer CWA's condolences on the passing of Chairman Dingell to all of you and to his family. My name is Chris Shelton. I am the president of the Communications Workers of America. We represent 700,000 employees in telecommunications and other industries including more than 45,000 in wireless. Let's tell it like it is. This merger would kill American jobs and raise prices on American consumers to enrich two foreign companies, Deutsche Telekom from Germany and SoftBank from Japan. Our analysis shows that 30,000 Americans would lose their jobs. More than 25,000 of those jobs would be in retail stores all across the country, some owned directly by Sprint and T-Mobile, others owned by independent retailers. The other job cuts would be in headquarters. Sprint and T-Mobile compete with each other for the same type of customers, often low-income households, which is why their stores are located near each other's sometimes right across the street. You will see in Newark, New Jersey how close the stores are together. You can see from the maps how Sprint and T-Mobile stores tend to be right next to each other. This is especially true for the prepaid brands, Boost and MetroPCS, which tend to be concentrated in lower income areas. So if the companies merge, why would they keep two neighboring stores open? Chances are, they won't. Rather, then the merger will mean pink slips for 30,000 wireless workers across the country. You heard the CEO of T-Mobile say that they will add jobs. Pardon my language, but that is just bull. Without binding and enforceable commitments, and I mean commitments that have no loopholes, such promises are just cheap sales and talk and are easily broken. First, T-Mobile doesn't differentiate between internal employees and contractors, short-term, temporary hires or long- term employees. Upgrading towers, for example, usually is done by temporary contractors not full-time employees. Second, Mr. Legere talks about call centers, but both companies have a long history of off shoring call center jobs, moving them to the Philippines, Mexico, and other non-U.S. locations. Third, T-Mobile has a track record of buying companies and then cutting jobs. After it acquired Iowa Wireless in 2018, it closed all Iowa Wireless call centers and more than 90 percent of its retail locations. It closed every single store in rural Iowa. Finally, trusting Sprint and T-Mobile with American jobs is like trusting a vampire at a blood bank. These are two of the worst companies in the United States when it comes to labor law and the treatment of workers. In recent years, T-Mobile has been charged with more labor law violations per worker than even Walmart. Violations include surveillance of employees and prohibiting workers from talking to each other about internal workplace investigations even regarding sexual harassment complaints. And what about the people lucky enough to stay employed? The merger would drive down wages for all wireless retail market workers, in some cases by as much as $3,000 per year. Fewer firms competing for skilled labor means that each firm will pay its workers less; employers compete for that skilled labor with wages and benefits. Take away competition and the remaining companies can throttle down employees' compensation while jacking up prices on consumers. Both are symptoms of the same disease, too much market concentration. If Sprint and T-Mobile had not fought their workers who wanted a union perhaps the employment and wage impact would not be as bad, but they did and it is. To sum up, 30,000 fewer jobs, lower wages by as much as $3,000 per year, disproportionate harm to low-income communities, higher prices for all consumers, all to help a state-owned German company and a Japanese billionaire make more money. Members of the committee, that is not in the public interest. It is economic treason. Thank you and I look forward to answering your questions. [The prepared statement of Mr. Shelton follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you, Mr. Shelton. Ms. Bennet, you are now recognized for 5 minutes. Please make sure your microphone is on and pull the microphone towards you. Yes, thank you. STATEMENT OF CARRI BENNET Ms. Bennet. Chairman Pallone and Doyle, Ranking Members Walden and Latta, and members of the subcommittee--my feet don't touch the ground either, just saying that. My name is Carri Bennet and I am with the Rural Wireless Association, and I first want to express my condolences to all of you all for your loss of Chairman Dingell. May his memory be a blessing. Thank you for this opportunity to testify today to discuss the impact that the proposed T-Mobile/Sprint merger will have on rural America. RWA opposes this merger. We have heard a lot of promises from T-Mobile over the years that have not been met, so we have no reason to believe that T-Mobile will follow through on their new promises if they are allowed to reduce competition. In short, this merger is bad for competition. It is bad for consumers especially in rural areas who will experience fewer choices, price increases, and substandard service. It should be denied. T-Mobile has a poor track record in rural America. Let's face it. T-Mobile is making a lot of promises about how they will expand coverage in rural America and improve service for these Americans, but they have a long track record of doing just the opposite and we have no reason to believe that this will change if the merger is approved. In fact, we think it will get a lot worse. I am going to run through three examples of T-Mobile's behavior that have my members concerned. Roaming. Roaming arrangements are important to rural Americans. Roaming keeps urban, suburban, and rural Americans connected. Sprint has historically worked with rural carriers to ensure rural Americans have robust mobile wireless service. T-Mobile has not. In fact, according to our members, T-Mobile's roaming rates are 20 times higher than Sprint's and T-Mobile's existing roaming agreements are one-sided. T-Mobile will frequently enter into unilateral roaming arrangements under which rural carrier subscribers can roam on T-Mobile's network with no possibility of T-Mobile subscribers roaming on the rural carrier's network. In such cases, T-Mobile has simply determined that it is better for its own customers to do without coverage in rural areas, rather than pay the rural carrier for network access. This means that in those areas T-Mobile's customers cannot be reached and are basically off the grid, all because T-Mobile chooses to restrict access. Do we really want a New T-Mobile's 100 million-plus subscribers which would be more than one third of the market share to be unable to access rural carrier's networks across the country? Next, rural call completion. Less than a year ago, the FCC found that T-Mobile failed to correct ongoing problems with delivery of calls to rural consumers. In fact, T-Mobile admittedly inserted false ringtones into these calls so that the caller believed the call was ringing on the other end when it wasn't. Aside from blatantly breaking the law, T-Mobile's actions severely hindered rural consumers from running their businesses, communicating critical information to family and friends, and reaching emergency service personnel. This callous behavior in an effort to save money underscores the fact that T-Mobile's treatment of rural Americans is not in the public interest and harms rural telephone companies who would have received payments for terminating those calls. We believe that T-Mobile's destructive behavior will continue perhaps even more aggressively once its rival, Sprint, is eliminated. Last, false broadband mapping claims. Our members have serious concerns about T-Mobile's broadband maps submitted in the FCC's Mobility Fund proceeding. That Fund was created to provide $4.5 billion to mobile carriers over the next 10 years to help connect rural Americans who lack quality wireless broadband service. To make sure they know where the money is needed the most, the FCC asked wireless carriers to submit maps indicating where each carrier offers qualifying 4G broadband coverage. According to testing done by our members, when T-Mobile submitted its data the company vastly overstated its rural coverage to make its reach even seem bigger than it was. When rural carriers went to test T-Mobile's claims 95.8 percent of the tests showed speeds below the threshold demanded by the FCC or no 4G broadband service at all. In many of the places where T-Mobile certified it had coverage cell sites had not been even put into operation. If left unrectified, carriers will be denied funds causing a loss of service to rural consumers who rely on this funding to connect. The FCC is currently reviewing this issue. But before the FCC can make a public interest determination regarding this proposed merger, it must first find that T- Mobile has been honest in its dealings with the FCC. Our members' drive tests strongly suggest otherwise. The FCC should not approve a merger if an unresolved enforcement proceeding is pending. I thank you so much for your time and I look forward to answering your questions. [The prepared statement of Ms. Bennet follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you very much. Mr. Brake, you are now recognized for 5 minutes. STATEMENT OF DOUG BRAKE Mr. Brake. Thank you. Chairman Doyle, Ranking Member Latta, and members of the subcommittee thank you for inviting me to share the views of the Information Technology and Innovation Foundation, or ITIF, on the pending merger of T-Mobile and Sprint. First, let me briefly echo the condolences to the Dingell family. He was a real legend and will be missed by all of us and all the members as well as his Twitter followers everywhere. With that, ITIF strongly believes that a combination of Sprint and T-Mobile would bring about a better future for American businesses and consumers compared to one which each company attempted to continue alone. In my written testimony I explore several reasons to support this merger. In these opening remarks I would like to focus on three key issues. First, this merger provides an accelerated transition to robust 5G. Second, more competitors is not always better. Or put another way, there is nothing special about the number 4. And, lastly, I would like to discuss the right way to define the market when thinking about this transition. First and perhaps most importantly, 5G. The key point here is that a combined firm would have both the spectrum assets and financial strength to deploy a robust 5G network with broader coverage and significantly more capacity compared to what either company could provide alone. Not all 5G is the same. Around the world, carriers are in the process of exploring business models, deploying pilots, and incrementally replacing old equipment with new 5G gear. These initial exploratory offerings are different in kind, however, from the 5G network the parties envision. The combination of T-Mobile's low band, wide coverage, 600 megahertz spectrum and Sprint's high capacity, 2.5 gigahertz spectrum would make for a high performance, nationwide, next generation network that would help propel U.S. leadership and economic competitiveness not just in 5G itself, but in the applications that an advanced network enables. This is incredibly important because 5G is anticipated to being more than just faster, more responsive phones. The technology is designed to be adaptive to a wide variety of use cases hopefully driving significant productivity gains throughout the economy. The capacity from a new 5G network would effectively increase the supply of wireless services, again more than the two companies could provide separately. We should expect this increased supply to maintain downward pressure on prices including in the wholesale and prepaid market segments. Second, let's talk about competition. You will hear some of my friends or you already heard some of my friends on the panel argue that the Government must preserve four carriers for competition. But competition is a means, not an end unto itself. Of course any market can have too few competitors, but it can also have too many, resulting in wasteful duplication of resources. I want to stress that again, more competitors is not always better. This is especially true given the economics of communications networks which feature tremendously high, fixed, upfront costs to serve a given geographic area. These high, fixed infrastructure costs allow for vigorous competition with relatively few competitors compared to other industries. We should want infrastructure companies to compete at sufficient scale. A combined company could do more with less, allowing the new firm to drive greater value throughout the business, ultimately passing a significant share on to consumers in the form of lower prices, a higher quality network, or innovative new offerings. A market of three healthy, relatively equal-size companies that continue to invest and innovate is far, far better than a lopsided market with two firms considerably stronger than the others. There is no reason to preserve four for four's sake. Lastly, it is important to not define the market too narrowly and acknowledge the dynamic forces changing competition. 5G is accelerating what are already rapidly differentiating business models in wireless services. Basic connectivity is increasingly commodified and wireless companies are instead looking to new revenue sources to recoup their large, ongoing investments. These new revenue opportunities include Internet of Things services, connected vehicles and drones, over-the-top video services, advertising, and perhaps most notably, fixed wireless broadband to the home, which is in turn prompting cable providers to explore wireless entry. These new business models with value-added services built on top of basic connectivity are likely to keep downward pressure on price for the traditional bundles of voice, text, and data whether there are three or more facilities operators. Because this merger will accelerate flourishing U.S. 5G future, improves the market structure with three strong firms with sufficient scale to vigorously compete, and comes at a time of rapidly changing business models, we believe it is in the public interest and hope it is quickly approved. Thank you and I look forward to your questions. [The prepared statement of Mr. Brake follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you. Mr. Berenbroick, you are now recognized for 5 minutes. STATEMENT OF PHILLIP BERENBROICK Mr. Berenbroick. Thank you, Mr. Chairman, Ranking Member Latta, and members of the subcommittee. And I want to associate myself and Public Knowledge with the statements of the panel and the members of the subcommittee honoring Chairman Dingell's life and his service. Thank you for inviting me to appear today and thank you for shining a light on the harms of the proposed Sprint/T-Mobile merger. Today's hearing will show that this proposed merger is a bad deal for consumers, for competition, and for America's wireless future. The evidence clearly shows that this transaction does not serve the public service and is unlawful under the antitrust laws. As you consider this deal ask yourself, what will it mean for each of your constituents who rely daily on their smart phones? The answer is clear. They will ultimately pay higher prices and have fewer choices for wireless service. Since announcing their intention to merge in April 2018, the companies have failed to show that the merger would not violate competition laws. They have failed to show that the merger would affirmatively serve the public interest as required for FCC approval and they have failed to show that other public interest benefits would offset the merger's substantial reduction in competition. The evidence Sprint and T-Mobile have presented to the FCC and the Department of Justice shows that consolidating the wireless market down to three national players would result in substantially higher prices for consumers. And you don't have to take my word for it, the economic analysis submitted by the companies admits as much. Recent promises that the merged company will not raise prices in the near term underscore the obvious. Post-merger the marketplace will not be competitive enough to discipline the three remaining national carriers when they raise prices. The proposed transaction will eliminate competition and choices for consumers. It will inflict significant harm on the low-income, prepaid, and rural consumers who can least afford to pay more. Additionally, the deal will lead to tens of thousands of lost jobs and lower wages for the workers that remain. The merger will eliminate avenues for new competitors to enter the wireless market, and, finally, the deal will harm small and rural wireless providers and their subscribers who rely on competitive choices for roaming and wholesale. Remember, under the FCC's public interest analysis, the companies' burden is not merely to show that there is a lack of public interest harms, they must demonstrate specific public interest benefits that would directly flow from the transaction. The FCC is charged with affirmatively promoting competition, not merely maintaining or protecting the existing level of competition. The companies have not shown that this merger would increase competition or benefit the public interest. The Commission's public interest standard is rooted in the text of the Communications Act and the Commission is charged with ensuring the availability of advanced telecommunications to all Americans and that quality services are provided at just, reasonable, affordable rates and the merger would frustrate all of these fundamental roles. For nearly a year, Sprint and T-Mobile have attempted to overcome these overwhelming yet predictable harms to the public interest, consumers, and competition. To distract from the damage this merger would inflict on wireless competition, the companies insist that this merger is about competing with cable companies. Don't buy it. We have heard this before. This is exactly the same song AT&T and T-Mobile sang when they tried to merge in 2011. Policymakers, the public, and enforcement agencies rejected these arguments then, and these claims are similarly hollow and misleading today. The merger benefits alleged by the companies have collapsed under public scrutiny and the companies' economic and engineering models have come under substantial attack and they actually undermine the case the companies are making here today. The DOJ, the FCC, and this subcommittee must follow the objective evidence they collect rather than relying on unverifiable and unenforceable commitments made by the companies. That evidence includes prior public statements by the companies themselves, prior FCC and DOJ evaluations of four to three wireless market mergers; international wireless market comparisons. All of this evidence clearly shows that the merger will gut competition in the wireless market, lead to dramatically higher prices for every wireless consumer; further, the evidence undermines the speculative and unverifiable benefits the companies continue to allege and have done so here today. To be clear, this merger is not necessary to build 5G networks. It will not increase investments in 5G. On their own the companies are already competing to deploy robust 5G networks. This will continue preserving the well-documented benefits of vigorous four-firm competition and it will not lead to new deployments in rural areas or help close the digital divide. Thank you for your invitation to appear here today and I look forward to answering your questions. [The prepared statement of Mr. Berenbroick follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Doyle. Thank you. With the conclusion of witness testimony we are now going to move to Member questions. Each Member will have 5 minutes to ask questions of our witnesses. And let me say to my colleagues that I love you all dearly and it pains me greatly to bring the gavel down when you have exceeded your 5 minutes. But the kindness that I showed last week resulted in many people going much, much over their 5-minute time. So if you are near the very end, then you ask the question and it takes more than 5 minutes for the answer, we will certainly let that happen. But after 5 minutes, please no more questions, or I am going to have to enforce it with the gavel. So, and I will try to set an example by yielding myself 5 minutes and staying within the time. So, Mr. Legere, I am going to ask you and Mr. Berenbroick the same question but a different way, and I am going to hold you each to 45 seconds because I have only got 5 minutes. So tell me, Mr. Legere, why you think this merger is different than other mergers in the past in highly concentrated areas. Tell me why you think this isn't going to result in some of the things we have seen in other mergers where it did raise prices and it didn't bring competition. What is different about this? Mr. Legere. Yes, thank you, Mr. Chairman. In general, the issue with mergers is that industries consolidate, supply goes down, prices go up, and jobs are eliminated. This is a unique merger where the outcome of this merger will be a significant increase in supply in the form of eight times the capacity that our network will make available. It will bring an 87 percent decline in the price per gig of data and jobs will go up. So this is dramatically different. It is unique. It is the advent of 5G. The complementary nature of these networks increases supply significantly which will decrease prices. That is quite different. Mr. Doyle. Thank you. And that was within the 45 seconds. I appreciate it. So, Mr. Berenbroick, tell me in the same amount of time why you think this merger is going to be the same as any other merger. Mr. Berenbroick. Thank you for the question. So this merger is remarkably similar to AT&T/T-Mobile. That merger was rejected by DOJ and the FCC in 2011. That deal would have led to, DOJ and the FCC found, higher prices, less competition to discipline the marketplace, less competition would also mean less innovation and service plans, less robust networks, lower customer service quality, less incentives to invest and deploy. Those things are all true here, but in some instances this merger is actually worse. We are actually eliminating both of the smaller maverick competitors that challenge and discipline the behavior of the two larger companies in the marketplace. There are also increasing harms to the prepaid market, low- income consumers, the Lifeline marketplace, and then lastly, the roaming and MVNO marketplace. Those harms are exacerbated here compared to AT&T/T-Mobile. Mr. Doyle. Thank you. Mr. Shelton, if a Sprint employee is working at a retail store and they lose their job because they are working across the street from a T-Mobile store, is the claim being made that that employee will get another retail job in that area or do you think, rather, it is potentially that these jobs will be displaced and at best replaced by different types of jobs in different communities? Mr. Shelton. First of all, it may not be a Sprint employee that loses their job, but that is kind of the problem with the numbers here. Most of the stores are independent contractors who don't have Sprint employees. But I don't see how even a Sprint employee, say, in Pittsburgh would lose their job in Pittsburgh because of consolidation of stores and end up in Pittsburgh. They might end up in Nebraska if Mr. Legere keeps his word and offers that employee a job. But I don't see how they are going to because of the concentration of stores. After this company merges, if it merged, they would have twice the number of stores that either AT&T or Verizon has now. So stores are going to be closed no matter what happens. Mr. Doyle. Thank you. Mr. Berenbroick, what precedent is set by allowing competitors to merge to achieve an evolutionary step in technology? I mean, what happens then for 6G or 7G, and how did the Government view similar claims for 3G and 4G? Mr. Berenbroick. Yes, Congressman, that is a good question. So, as you will recall in AT&T/T-Mobile, one of the claims the companies made was that they couldn't deploy 4G LTE coverage to the entirety of their network footprints to the rest of the country if they didn't merge. The Government evaluated the evidence that was before it, they rejected that. They found that that was not credible. They found that competition was likely to lead to deployment not consolidation. The same is true here. So essentially, if you buy into the argument that we need to allow these companies to merge for 5G--by the way that is directly contrary to the statements they have made to Wall Street and investors even, you know, very recently--you know, it essentially sets the precedent that whenever there is a need for these companies to invest in new infrastructure to employ 6G, 7G as you said, the gates are open to additional consolidation. Consumers need more competition for lower prices and better services, not fewer. Mr. Doyle. And I see I have 7 seconds left, and I am going to yield it back to set a good example for the rest of my colleagues. And I will now yield to the ranking member. Mr. Latta. Well, thank you, Mr. Chairman. And thank you very much for yielding. And, Mr. Brake, if I could start my questioning with you, my district is a microcosm of the country, going from Toledo to suburban neighborhoods all the way to small communities in sparsely rural counties. The State of New York is also well- known for being split between rural and urban communities. What lessons can the committee draw from the New York Public Service Commission's approval of this merger last week in terms of benefits on both for the rural and urban communities? Mr. Brake. Sure, yes. I thank you for the question, Mr. Latta. Yes, the New York Public Service Commission, I think the main takeaway is that this Public Service Commission took a hard look at this merger, determined that it was in the public interest, and allowed it to go forward with minimal conditions, modest conditions related to jobs. It saw it was benefitting the State long term. As far as your question regarding both urban and rural areas, I think the most important point again is this combination of complementary spectrum assets. You have the low band 600 megahertz that provides great coverage to a wider area but is relatively limited in the capacity it can offer compared to the 2.5 gigahertz spectrum assets that Sprint has ready to deploy for 5G which has a much greater capacity. So with the two of those combined you get a much better network in terms of both coverage that can help provide, you know, maybe not the greatest capacity but a wider area in rural areas to provide much of the service of 5G, but also in urban areas you get a much greater capacity with a 2.5 gigahertz to see a more robust 5G network again than either company could provide on its own or even greater than the two individual companies combined, if you want to put it that way. I would note, however, the jurisdiction of States is somewhat different than the review at the DOJ and the FCC. So if I may if there is time, one of the main issues that is unique to the State level jurisdiction is that of jobs. And so with any merger there are going to be jobs created and jobs destroyed, right. I mean that is inevitable. The companies say that, you know, they will be a job creator from day one and apparently the New York Public Service Commission was content with that assertion in addition to some commitments and I believe a call center being built in New York. But, and this is a somewhat unpopular point particularly with politicians, but wireless services, this is not a jobs program, right. Again perhaps an unpopular point, but if the companies combined--not even specifically this merger but any companies--can provide a greater output, more capacity, greater services with fewer inputs including labor that is the definition of productivity. That is what drives economic growth in this country and should be a good thing. I recognize that is not a popular opinion and especially among politicians, but productivity growth is an important component for this---- Mr. Latta. Thank you. Ms. Bennet, would you like to comment on New York, right, would you like to comment? Ms. Bennet. Well, I was just going to point out that the review by the New York Public Service Commission is not looking at--it is only looking at the jobs issue. It is not looking at the overall merger. That is regulated to the DOJ and to the FCC and they do not have jurisdiction over that. I wanted to hop back to a point though that Mr. Legere made about 87 percent decline in prices per gig. I would like to see some of that pass through on the roaming rates because right now roaming rates are about 10 times to 15 times higher than the retail rates they offer their own customers. So essentially that means they made that in a wholesale environment, the carriers are charging more than the retail environment. So the cost is definitely lower if they can pass on retail rates that are lower than the wholesale rates. Sorry, not your question, but I just wanted to go back to that for a minute. Mr. Latta. Thank you. Mr. Berenbroick. Congressman, can I jump in for 1 second? I apologize. Mr. Latta. I am sorry. I am almost out of time here. Mr. Legere, if I could, I have about 38 seconds left if you would like to comment. Mr. Legere. Yes, I would like to comment. And I appreciate the comparison. Yes, the New York Public Service Commission is one of 16 States that has approved the merger and their review looked at all of the same issues, what it is going to mean for the State from the standpoint of 5G, median speeds of 450 megabits, the promise of 5G while having prices decline, having jobs go up, this was reviewed in total and all of the benefits that we preach about this merger New York saw and we committed with them to the things that are appropriate for them. And the promise of it is similar to the reviews that are taking place with the FCC and the DOJ. Mr. Latta. Well, thank you very much. And, Mr. Chairman, I yield back. Mr. Doyle. Thank you. The Chair now recognizes Mr. Pallone, the full committee chairman, for 5 minutes to ask questions. Mr. Pallone. Thank you, Chairman Doyle. It is no secret that unions are under attack. Corporations have sought to limit the power of unions which are fighting to make sure workers are fairly treated and get a livable wage, and what we are seeing is a growing disparity between the people at the top and the hardworking people like those in New Jersey, the folks who haven't seen a dime to the huge corporate profits in the Trump tax giveaways. And just this week, news reports highlighted that the average tax refund will be 8.4 percent less this year, so, so much for the GOP tax reform. Now the CWA has argued that the merger of T-Mobile and Sprint could wipe out as many as 30,000 jobs, about 25,000 in retail and about 5,000 corporate. At the same time, T-Mobile has announced it will be opening five new customer experience centers if the merger is approved which will create up to 5,600 jobs by 2021. So I wanted to ask Mr. Legere about that. In 2012, T-Mobile shut down seven call centers and allegedly sent the jobs overseas. But now, you know, you are saying that we are going to have these new customer centers. Is there anything in the law or any legally enforceable protections to ensure that these new center jobs are actually created? And, if those jobs are created, is there anything in the law or any legally enforceable protections to ensure that they wouldn't be outsourced in a few years to somewhere else? Mr. Legere. Thank you, Congressman. A couple things I would like to insert is--and I am very proud of my tenure of being the CEO since the end of 2012. I would point out that the employees, badge-carrying T-Mobile employees since that time have gone up 250 percent. The employees of MetroPCS---- Mr. Doyle. Mr. Legere, is your microphone on? Mr. Legere. Yes. Mr. Doyle. OK. Mr. Legere. OK, sorry about that. Mr. Doyle. Move that a little closer so we can hear you. Mr. Legere. But I have had a 250 percent increase in employees, badge-carrying employees at T-Mobile since the time I have been CEO. I would also like to point out that I am very proud of the over 50 workplace awards that the company has worked to attain, including the 100 Best Companies Award for-- -- Mr. Pallone. But, Mr. Legere, could you address the call centers? If not, I am just going to move on because I don't have that much time. Mr. Legere. Yes. The call centers, they have 5,600 jobs including 2,000 additional, making it 7,500 to 7,600 jobs are a critical integrated part of our business plan, our filing with the DOJ, our support documentation to the FCC, and it is something that I am completely committed to. Mr. Pallone. All right. I mean, Mr. Shelton, if I could ask you, does that comfort you, his response, or what is your take on how this merger would affect wages? Mr. Shelton. Our belief is that it will have a downward effect on wages. And we have a study from the Economic Policy Institute and the Roosevelt Institute that just like prices go up with less competition, wages go down with less competition for labor. The one exception is where you have collective bargaining, but T-Mobile and Sprint oppose collective bargaining. And if I may, when T-Mobile laid off those 3,300 people, call center people in the past, they said that the work did not go overseas. The Labor Department did an investigation and found out that it went to the Philippines. So, you know, how do we take their word now? And if you look, not only has the workforce in the United States increased, but also the workforce in the Philippines and lots of other countries has increased by leaps and bounds. Mr. Pallone. All right, let me ask Mr. Legere, if I can, one more question about resiliency of the Nation's communications systems and public safety. My district was hurt probably more than any other district by Superstorm Sandy and we have done a lot since then on a bipartisan basis to try to address resiliency for the communications systems. And I see that the FCC's 2017 Atlantic Hurricane Season Impact on Communications Report outlines a portion of the problem. It notes that in 2017 the U.S. experienced 16 natural disasters with costs totaling 360 billion. I would like Mr. Chairman to enter that into the record, if I could, that report. Mr. Doyle. Without objection, so ordered.\1\ --------------------------------------------------------------------------- \1\ The information has been retained in committee files and also is available at https://docs.house.gov/meetings/IF/IF16/20190213/ 108895/HHRG-116-IF16-20190213-SD007.pdf. --------------------------------------------------------------------------- Mr. Pallone. But my worry is that consolidation of network infrastructure could prioritize cost savings over resiliency in the face of disasters. And I notice network resiliency wasn't addressed in your public interest statement at the FCC. So, Mr. Legere, there is not much time. Can you explain why you chose to leave this issue out of that public interest statement, and whether you had discussions with the FCC regarding how this deal will affect network resiliency and public safety? Mr. Legere. Thank you for that important question, sir. I think the FCC's feedback on the increase in resiliency and the response to natural disasters in the last year or two by T- Mobile has been industry-leading and something that they are extremely proud of. Resiliency of our networks has been a critical priority and it is a critical priority of the New T- Mobile's network. And, you know, this infrastructure plan will significantly increase the resiliency of our network and it is part of the plan. Mr. Pallone. All right, thank you so much. Mr. Doyle. The gentleman yields back. The Chair now recognizes Mr. Walden, the full committee ranking member, for 5 minutes to ask questions. Mr. Walden. Thank you, Mr. Chairman. And before I start I want to thank you for your concern about these jobs. You know, we had a hostile takeover here at this committee and we lost about half our staff. And I am just wondering, in this new spirit of protection of lost jobs could we get those back? [Laughter.] Mr. Doyle. Yes. Were they reassigned to a different neighborhood? Mr. Walden. Yes, you could say that. I want to thank our witnesses for being here. Mr. Berenbroick, I know Mr. Brake talked in his testimony about the number 4 carriers. Is there a magic to number 4 in terms of competition in this space? Is there some magic to four versus five versus three versus eight? Mr. Berenbroick. You know, it is a good question. The key as the Department of Justice and the FCC look at this deal isn't whether there is a magic number of firms in the marketplace. It is do the players in the marketplace, does the structure of the marketplace promote lower prices, more investment, better choices for consumers, better--more deployment of broadband services? And we believe, frankly, that when you take these two companies and you merge them together you eliminate the mavericks, the companies that have been the driving competitive forces in the industry. So to answer your question directly, I don't believe there is a per se magic number, it is about market structure. Mr. Walden. OK. Mr. Berenbroick. But this transaction has significant concerns. Mr. Walden. Mr. Brake, do you want to comment on that briefly? Mr. Brake. Sure. I mean as I mentioned, right, there is no real magic to the number 4, but it seems to be a lot of the folks pushing to preserve four seem to think that more is necessarily better, you know, why not five, why not six, why not seven? And the answer is clear. It is because then you end up with all of this duplication of infrastructure that leads to a fragmentation of market, increases costs that ultimately have to be borne by consumers of the network, right. And so the question is, what is the optimal balance between, you know, competition that drives down prices, continues innovation but doesn't see these duplication of resources? Considering the limited cash flow and the high debt of Sprint, there is a good indication that that number, that optimal number is closer to 3 rather than 4. Mr. Walden. All right. Thank you both. I appreciate your perspectives on that. I want to turn to our other representatives here. Talk to me, Mr. Claure and Mr. Legere, about roaming rates and what we should anticipate, consumers. And about data, both data access and costs going to go up, going to go down? As you both know, my district is pretty enormous and gives new definition to rural and remote, and we are concerned about how these two would work. And I don't know which among you wants to, between you wants to go first on that, but please, and thank you again for being here. Mr. Claure. Thank you, Congressman. One of the most important pillars of this merger is increasing capacity. Basically when you put these two networks together you are going to create eight times the capacity. So to put things in perspective, imagine if you had a stadium in which two thirds of it is empty. Pretty much you are going to be, you are going to have an economic incentive to basically reduce prices and find different people to fill this capacity. This is why we have been very clear and we made a commitment to lower prices. Traditionally, most mergers, you don't find companies that go and make a voluntary filing to the FCC like John at T-Mobile did basically making a commitment that prices will remain the same or lower. It is a question of capacity. We are going to have more capacity than ever before, eight times capacity, so we have got to fill it and that is going to be filled by the different partners in the industry. Mr. Walden. All right. Mr. Legere, do you want to address those two issues as well? Mr. Legere. Yes. Thank you, sir. I would first say, let's be clear. The wireless industry is a duopoly controlled by AT&T and Verizon who control over 80 percent of the profitability and 95 percent of the cash flow and after the merger they will still have almost 70 percent market share. What we have done for 6 years at T-Mobile as the uncarrier, the whole thesis of this transaction is to use this increase in supply, capacity, and decreased price to supercharge the uncarrier, to bring competition. You will see users have an 87 percent decline in the price per gigabit of data. You will have an eightfold increase. Users will go from ten gigs to eighty gigs and that is just in wireless. We expect to take that competition also to the cable industry which is not only a duopoly, it is a monopoly. And most of America, 79 percent, have no more than one choice for high speed broadband access and we plan on entering that market, having as many as 9.6 million customers serving 50 percent of the geography of the United States and saving just in that part over $13 billion a year to people on their cable and in-home broadband bills. Mr. Walden. All right. I thank all of our witnesses for your comments. My time has expired. I yield back. Mr. McNerney [presiding]. Thank you. I recognize myself for 5 minutes, but I first want to reiterate my colleagues and the panel on recognizing the leadership that John Dingell provided on a bipartisan way to get legislation done that was sustainable in the long run, and hopefully we can continue in that tradition. Many households in my district live paycheck to paycheck. More than a quarter have an annual income of less than $35,000 a year. If these households are faced with even a couple more dollars each month it could mean they no longer have access to wireless service. So, Mr. Legere, can you cite any recent example where a country went from four to three wireless carriers and prices did not increase? Mr. Legere. Thank you very much for the question, sir. And the types of customers that you describe we are disproportionately serving both at T-Mobile and at Sprint and they disproportionately have benefitted from what we have done because they are the highest---- Mr. McNerney. Which is why we are worried about the merger reducing competition to those, to that sector of the population. Mr. Legere. Thank you, sir. Since we have acquired MetroPCS, the average price of a prepaid service to our customers has gone down four percent, but the data usage has gone up twelvefold. Mr. McNerney. But you really didn't answer my question. Any recent examples of countries that went from four to three and did not have prices increase? Mr. Legere. I am not a study in the countries around the world, sir. Mr. McNerney. I understand. Mr. Berenbroick, is it true that the three to four merger of T-Mobile Netherlands and Orange led to price increases in the Netherlands compared to other control countries? Mr. Berenbroick. Yes, Congressman, between 10 to 17 percent price increases. Mr. McNerney. Wow. And is it true that when Austria went from four to three wireless carriers the prices also increased? Mr. Berenbroick. Yes, sir, between 14 and 20 percent. And what is particularly important in that market is that one of the three remaining players is one of T-Mobile's sister companies, T-Mobile Austria. Mr. McNerney. Wouldn't this merger have an even greater impact on lower income people who depend on prepaid services since we would be moving from three to four facility-based prepaid providers? Mr. Berenbroick. Yes, sir. I believe it would. You know, in this marketplace in the prepaid market you tend to have only three players currently--T-Mobile, Sprint, who would merge, and AT&T. T-Mobile and Sprint would have a dominant position in that marketplace and have the power and incentives to raise prices on those prepaid customers who, you know, frankly, are likely to be lower income, likely to be mobile-only, likely to be consumers of color and, frankly, would have no other choices in the marketplace. So prices would go up on them and they would have nowhere else to turn. Mr. McNerney. Thank you. Mr. Legere, I have a letter here from you to the Chairman of the FCC dated February 4th of this year in which you stated, ``I want to reiterate unequivocally that New T-Mobile rates will not go up, rather our merger will ensure that American consumers will pay less and get more.'' And I am going to submit this to the committee, without objection. [The information appears at the conclusion of the hearing.] Mr. McNerney. Is it also correct that on the same day you submitted a letter, counsel for T-Mobile submitted an ex parte filing to the FCC, that further articulated this commitment? Mr. Legere. Yes, sir. Mr. McNerney. And I am going to submit this to the committee, without objection. [The information appears at the conclusion of the hearing.] Mr. McNerney. Mr. Berenbroick, I am curious to take into your opinion on this commitment. Mr. Berenbroick. Well, thank you for the question and this is an important issue. So the history of these merger conditions, behavioral merger conditions in concentrated markets, is not a positive one. We saw this with conditions on Comcast where it violated its merger conditions with regards to Bloomberg. Mr. McNerney. Well, let me ask you specifically, if a small amount of data is added to T-Mobile and Sprint legacy plans consumers could see an increase in the amount they pay for their plans; is that correct? Mr. Berenbroick. Yes, sir. Under the letter that was filed last week that appears to be the case. Mr. McNerney. Is it your opinion that under the proposed condition legacy Sprint and T-Mobile fees could be hiked and there would be nothing to stop that? Mr. Berenbroick. Yes, sir. And even if those fees were hiked and even if those were covered by the commitment that T- Mobile has said it has made, how are consumers supposed to enforce that? Are they supposed to, you know, come to the FCC which has forsworn rate regulation and ask it to step in and enforce this on T-Mobile? It just seems impractical and enforceable. Mr. McNerney. And yes or no, is it your opinion that under the proposed condition legacy Sprint and T-Mobile surcharges could be hiked and there would be nothing to stop that? Yes or no, please. Mr. Berenbroick. Yes. Mr. Legere. Sir, could I respond to some of---- Mr. McNerney. Yes, I am going to just wrap up here. I hope that your promise that the people will get more for what they are paying holds true. My concern is that many people won't even be in a position to take advantage of that promise because they might not be able to scramble the extra cash they need. Simply put, I am worried about many of the constituents that I have would be priced out. And my time has expired and I yield to Mr. Shimkus. Mr. Shimkus. Thank you, Mr. Chairman. Mr. Legere, you can respond to that. Mr. Legere. Yes. Thank you very much. And I, you know, with respect, my colleague continues to interpret what is taking place at the FCC through his interpretation of what the outcome is before their work is completed that I highly respect what is taking place. Several things, I want to be clear. I have worked very hard to rid the lines between postpaid and prepaid such that---- Mr. Shimkus. Yes, let me ask because I was going to have that question anyway. I am old enough to know the Uncola. We are using the term ``the uncarrier,'' so describe ``uncarrier.'' Mr. Legere. Yes. ``Uncarrier'' is a term that I coined. It was the thesis and the genesis of who we were going to be. And what it was, was we set out to fix a stupid, broken wireless, arrogant industry by listening to customers and solving all the pain points and removing those barriers. Mr. Shimkus. Like what? Give me some quick examples. Mr. Legere. We eliminated contracts, eliminated international data roaming, free, you know, free music streaming, et cetera. So things---- Mr. Shimkus. So let me follow up on this question. So if you enter as a more dominant competitor to AT&T and Verizon, wouldn't that uncarrier characteristics carry into that competitive marketplace, or are you going to jettison that? Mr. Legere. Sir, my goal has been not just to differentiate myself by the changes but to force AT&T and Verizon to change, that the wireless industry would adapt. I have been successful in changing the industry, but I am not breaking through because I don't have the scale and the resource and capability. The goal here is to supercharge that uncarrier and force AT&T and Verizon to invest more in 5G, to lower prices, broaden services, go deeper into in-home broadband, and I believe that that is possible through this merger. Mr. Shimkus. Yes, and I appreciate that. And, Mr. Claure, kind of what is going to happen if the merger gets approved? You do bring something beneficial to this debate especially for the rural folks. Greg Walden represents rural America. I represent rural America, Billy Long. We have a lot of folks here that that is a concern. Is there a way to carry that roaming debate that Sprint trumpeted to this new merged company? Hit your mike. Mr. Claure. Thank you for your question. Today, Sprint has contracts with most of the rural carriers and those are contracts. And I have been very clear with John that the New T- Mobile will plan to honor the contracts that Sprint has signed. What is important for most of you who have people in the rural part of the country, it is very simple. T-Mobile did not have 600 megahertz spectrum so T-Mobile couldn't basically build a nationwide coverage. Today they do. They like the capacity they can buy with our spectrum. So we are going to bring 5G to every corner of America and that is going to be a huge differentiator. You have seen the lack of competition that exists today in rural America. Mr. Shimkus. So, Mr. Legere, I would hope that that would be part of the new corporate culture as far as if this is a successful merged company. I think my folks in the rural wireless would like to see that too. Mr. Legere. Yes, sir, a hundred percent. I would just like to point out that when you take the topic of rural there is two important components, the rural customer right now who is not being served, does not have choice, and the rural carrier. Both of those carriers will be served greatly by this transaction. I clearly have honored that I will, you know, commit to honor all of the agreements that Sprint has and I believe that we will be in a position to negotiate even better things for the rural players. And I believe that in that partnership we can be the rural players' partner to bring them to the 5G evolution and the winner will be the rural customer. Mr. Shimkus. Thank you, Mr. Legere. With my remaining time I want to try to get two things done. One is to remind my colleagues that this evening at 6:00 in the Rayburn Foyer, the Next Generation 911 has their awards ceremony. Especially if you are new on the committee and want to know 911, telecommunications, location, that is a good event to stop by and I want to encourage you to do that. And, Mr. Berenbroick, I am sorry. In your comments in your testimony you lauded the Department of Justice on their decision on the T-Mobile--what was it--AT&T merger. Our point is you have the FCC and the Department of Justice making this ruling. Do you trust the DOJ to make the ruling without, as Ranking Member Walden said, political influence? Mr. Berenbroick. Thank you, Congressman. Yes, obviously that issue of political influence has come up with regards to merger reviews in the past. Yes, I do trust the staff at the Department of Justice to fully review the evidence before them, the staff at the FCC to fully review the evidence and to make those recommendations. Mr. Shimkus. Thank you. Thank you, Mr. Chairman. Mr. Doyle. Thank you. The Chair now recognizes the gentleman from Iowa, Mr. Loebsack. Mr. Loebsack. Thank you, Mr. Chair. And I do thank the chair and the ranking member for having this hearing today and I want to thank all of you for being here as well. It has been pretty enlightening. I think it is an important hearing. I am happy to hear that there has been a lot of focus on rural areas. Both sides of the aisle, we represent, many of us on this committee represent significant rural areas. So I am going to get right to my first question. Ms. Bennet, your testimony you state that T-Mobile has, and I quote, ``determined that it is better for its business to do without any coverage in rural areas,'' unquote. As a representative of a rural district--not as big as some of them but nonetheless pretty darn big, 12 to 13,000 square miles, 24 counties--where coverage can often be dismal or nonexistent, I get around my district all the time. I experience this whenever I am back. I find that particular assertion very worrying, as you might imagine. Can you clarify a little bit more on that point? Ms. Bennet. Certainly and I appreciate the question. Our members who have built out the rural networks in their rural areas and it is not everywhere, to be clear it is only in the areas that they serve. Mr. Loebsack. And you did mention Iowa in your testimony? Ms. Bennet. Yes, yes. And what has happened is in negotiations with T-Mobile, T-Mobile elects not to--they lack- restrict. It is a technology that you can put in place so that their customers don't have access to those rural carriers' networks. So they have roaming agreements because under the FCC's rules they have to let the rural carriers' customers roam on their network but not the reciprocal. So that they choose not to do that and that is because they probably don't want to pay the roaming charges to the rural carriers. Mr. Loebsack. Well, if T-Mobile and Sprint are combining services can T-Mobile make a structural commitment to use Sprint's rural carrier service model? Ms. Bennet. Those are very hard to enforce after the fact. And to go back to the favorable agreements that we have with Sprint, right now those are expiring and we haven't been able to get any certainty from Sprint about whether those would continue regardless of whether the merger goes through. They just have been silent. They have gone silent on us and have told us that we have to wait until the merger is done---- Mr. Loebsack. OK. Ms. Bennet [continuing]. Or not done. Mr. Loebsack. Thank you. My second question is for Mr. Shelton. CWA recently released a report on the impact in Iowa from T-Mobile's acquisition of iWireless which has been mentioned. One of the things that stuck out to me from this report was a dramatic decrease of T-Mobile's retail footprint in Iowa. Can you expand a little further regarding T-Mobile's acquisition of iWireless and how that reduced access in rural parts of my State and district? Mr. Shelton. Yes. When they bought the company in Iowa they closed down 90 percent of the stores. And now for a consumer in Iowa, in a rural place in Iowa, they have to drive 68 to a hundred miles to get to the nearest T-Mobile store in Iowa. And if you look at the company's plans, their own plans say that 46 million rural customers will not be served by their 5G network. So that does not bode well for Iowa. And, actually, I know it is kind of difficult in this political environment to demonstrate fairness, but I am going to do it in this case, Mr. Legere. I am going to give you an opportunity to respond and make your case, because to be frank, Ms. Bennet's and Mr. Shelton's remarks leave me very concerned about the potential negative outcomes in Iowa. I know there are at least two sides to every story, so I want to give you a chance to respond to them. And in particular will T-Mobile make structural commitments to rural constituents in my State who may stand to lose jobs, coverage, or retail services? Mr. Legere. Yes, sir. Thank you very much. And the facts associated with what is happening with Iowa Wireless I would be glad to submit after the hearing as well. But let's just be clear. There are a hundred more employees than there were a year ago in Iowa. There are 35 MetroPCS, Metro by T-Mobile stores equaling the number of what the stores were there before. And Iowa Wireless was a failing company stuck in 2G and 3G and we came in and provided the investment. We spent $70 million so far upgrading to the 4G and now moving to 5G network. Mr. Loebsack. I am kind of running out of time here. I want you to address the structural agreement issue going forward. Mr. Legere. I would be glad to look at ways to make that commitment. And I would point out that part of our plan is to cover 96 percent of the 62 million people in rural America with LTE coverage and 84 percent of all of rural America with greater than 25 megabits of in-home broadband. Mr. Loebsack. And a group of politicians here, we make promises quite a lot. I would like this to be in writing. That is what I would like it to be. I would like to see you make that commitment, that structural commitment. Mr. Legere. Yes, sir. It will be in my business plan as well. Mr. Loebsack. To make sure we have that access here in Iowa. Thank you very much, Mr. Legere. And I have 10 seconds left. I am going to yield back my time, Mr. Chair. Mr. Doyle. Thank you. I now recognize my good friend from Ohio, Mr. Johnson, for 5 minutes. Mr. Johnson. Well, thank you, Mr. Chairman. And I appreciate the panel being with us today. Mr. Legere, historically, Sprint has been an effective partner with rural wireless providers--say that fast--allowing their customers to access Sprint's voice and data network when roaming. I represent a very, very rural district in Appalachia. Ms. Bennet has testified that T-Mobile has been unwilling to partner with rural providers or otherwise serve rural America. Can you share what services the New T-Mobile intends to provide in rural America and if there are any plans to partner with rural providers? I know we have alluded to some of this already, but if you could do it for me I would appreciate it. Mr. Legere. Yes, sir. Thank you very much for the question. I have two things I would like to point out. One is, historically, T-Mobile has not had the wherewithal to provide full capabilities in rural America. We were a very densely urban company with no low band spectrum that covered rural America and we only recently have that. New T-Mobile will have significantly more ability to do that. Secondly, Sprint is not going away. This is a merger between T-Mobile and Sprint and all of the good of Sprint will be part of the integrated T-Mobile and we plan to carry those forward. And I believe that in addition to providing broader services to rural customers, better LTE coverage, in-home broadband, I believe that we have a great ability to be a partner with rural carriers. We need their help with last-mile access with capabilities and I think we can provide them with a pathway to 5G. So I think it is the best partnership for both rural customers and rural carriers. Mr. Johnson. All right. Well, thank you for that. So specifically then, will the New T-Mobile continue to make wholesale agreements available that are in line with those currently made by Sprint or T-Mobile? Mr. Legere. Yes, sir. And all wholesale agreements are currently contractual. We will honor those. I believe with the supply and capacity that the New T-Mobile will have that wholesale rates are only going to get better. In fact, carriers that have agreements with both Sprint and T-Mobile will be able to choose the better of those and the alternative that suits them as well. Mr. Johnson. OK. Well, thank you. Mr. Brake, Ms. Bennet's testimony indicates that the New T- Mobile would have zero incentive, quote, zero incentive to provide commercially reasonable roaming rates, terms, and conditions to RWA members. Although, aren't there rules at the FCC in place to ensure that carriers do just that and if they do not there are enforcement mechanisms that the FCC can take? Mr. Brake. That is right. Thank you for the question. So the rural coverage is a multifaceted issue. This roaming issue is a narrow component of it. And I just want to be very clear about the sort of dynamic here, right. The members of the Rural Wireless Association enjoyed favorable negotiations with Sprint mainly because they had a very small network focused on cities and did not have the rural coverage. And so, and I don't mean to disparage the members, right. There is nothing more American than trying to, you know, serve your community with wireless services. But this is a wildly inefficient system to have a bunch of small rural operators trying to negotiate with a small limited coverage nationwide carrier is not an efficient way to do things. We should have companies operating at scale, building out coverage into rural areas as best they can. It is better to do that at scale than to hamstring providers to have individual small companies in each pocket of rural America. Mr. Johnson. All right. Well, thank you. Ms. Bennet. I am sorry. I just have to interject here if I could have permission. Mr. Johnson. No. I have got to move on because I am limited on my time. Mr. Legere indicated in his testimony, in 2012 CWA claimed that the T-Mobile MetroPCS merger would destroy 10,000 jobs when that merger actually generated 12,000 new jobs following the transaction. So, Mr. Shelton, why should we believe CWA's claims that the current merger will result in 30,000 job losses, which incidentally exceeds Sprint's entire employee head count? Mr. Shelton. Well, in the first instance, we were concerned about call centers jobs because T-Mobile had just shut down seven U.S. call centers in the U.S. laying off 3,300 people and sending the work to the Philippines. MetroPCS outsourced its entire call center operation. If T-Mobile adopted MetroPCS' outsourcing model, then 10,000 T-Mobile call center workers' jobs were at risk at the time. Mr. Johnson. OK, my time has expired. So let me ask Mr. Legere real quick if the chairman will indulge, do you want to respond to that as well? Mr. Legere. Yes, I think what my colleague was attempting to explain is why his estimates were wrong and it didn't take place. I would also just like to submit that the CWA predicted that the AT&T/T-Mobile transaction that was disapproved would add 96,000 jobs. So I know what my business plan is and I am very clear jobs will be created. Mr. Doyle. The gentleman's time is expired. The Chair now recognizes the gentleman from Virginia, Mr. McEachin. Mr. McEachin. Thank you, Mr. Chairman. And thank you for holding this hearing to help us better understand these very complex issues. As for me, I am particularly interested in how the T-Mobile/Sprint merger will affect market for low-income consumers with poor credit. The services you provide are absolutely essential in the vulnerable communities and that with reduced access this merger will have profoundly harmful effects. That is why I would like to talk about what this merger would mean for the prepaid market. Now Mr. Berenbroick--did I say that right? Mr. Berenbroick. Close enough, sir. Mr. McEachin. Thank you. In your testimony you discuss the effects of this merger on these customers, that is again the prepaid mobile market. Can you expand on probably what this merger means for this customer base in terms of choice and price? Mr. Berenbroick. Yes, sir. And that is an important question. The prepaid market is, you know, right now it has about 97 million subscribers. I think that was the number at the end of 2017. And, you know, those nearly a hundred million people are more likely to be people who are low income, people who mobile is their only connection. They might not have a fixed broadband connection at home because it is too expensive. They are more likely to be young people or persons of color who maybe have bad credit or no credit. This market drastically consolidates that marketplace. The HHI numbers that we talked about with the antitrust review are even higher for the prepaid marketplace, which means that the combined Sprint and T-Mobile in a duopoly market where only AT&T is there, is going to have the power and the incentives to raise prices on those consumers, consumers who, frankly, are reliant on that mobile connection and have nowhere else to go. Mr. McEachin. Now, Mr. Legere, you have suggested that the prepaid market would benefit from the merger and even made commitments to the FCC not to raise rates for these plans for 3 years. And we have already heard arguments that the spirit of those commitments may not really bind you in practice. I assume you are making this commitment in good faith, but business plans change. How can we be sure prices will not increase especially for low-income Americans? For instance, could consumers take you to court? Mr. Legere. Thank you very much, sir. This whole topic is one that is extremely important. And what I have attempted to do and what T-Mobile has been successful in doing is blurring the lines between what is called postpaid and prepaid, such that it is almost a payment term. You pay on the first of the month or the last of the month, so that prepaid customers are not getting lesser capabilities or quality or data than previously. We are very proud that we are a large provider second behind billionaire-backed TracFone in serving the prepaid market and that is very important to us. And our track record is that our prepaid customers over the last 5 years have had a four percent decline in price, a 12 times increase in data, and I have implemented plans, by the way, to allow prepaid customers to create their own credit by their payment history with T-Mobile as opposed to their other forces and use that as a way if they choose to move to postpaid. And I have a migration of about 150,000 customers a quarter going from prepaid to postpaid very proudly and that will continue. Mr. McEachin. Mr. Berenbroick, I would like to give you the last word with my remaining time. Can you speak to Mr. Legere's comments that he just made? Mr. Berenbroick. Yes. I guess I just--I didn't know if there was a commitment there or a promise. But, you know, I think what the committee and I think what the Department of Justice and FCC should be looking at with this marketplace is are prices likely to go up? Does the combined firm and the other players left in the prepaid market have the power and have the incentives to raise prices? And when you constrict this marketplace down to two facilities-based providers, New T-Mobile and AT&T, that is clear and evident. A duopoly market will result in higher prices for the people in the prepaid market who can least afford to pay those higher prices. Mr. Legere. Sir, could I just emphasize the last word. I want to be very clear in any which way you would like to ask the question, prices will go down. Unit cost prices will go down. Absolute prices will go down. And the pricing commitment that I asserted on February 4th, I believe was the date, was not in response to a negative review process. It was an attempt to add another layer in addition to my business plan that says if you are concerned whether there was any trickery let me be clear, the rate plans will stay in place and customers that pay X today will not pay more. And that was a very clear attempt that I made. Mr. McEachin. Mr. Chairman, thank you. I yield back. Mr. Doyle. Thank you. The Chair now recognizes the gentleman from Missouri, Mr. Long. Mr. Long. Thank you, Mr. Chairman. And, Mr. Legere, in my district T-Mobile has a call center that employs nearly 1,000 employees. Since it opened in 2006, it has shown continuous improvement in employee retention and performance. And in 2006 and 2007 it was ranked number one by 417 Magazine as the best place to work in Springfield, Missouri, my hometown. Can you talk about the New T-Mobile commitment of at least 600 new retail stores, five new customer experience centers, and 11,000 new employees on the ground in rural areas, small towns, communities that need them most? What affect will this merger have on jobs in my district? Mr. Legere. Thank you, sir. I am very proud of the fact that a core component of the uncarrier and T-Mobile was even changing the definition of what is a call center, away from IVRs and robotic responses and taking and empowering those people like in Springfield, Missouri to own, personally, customers, called team of experts. And what I am doing with the merger is I am creating five new, gigantic centers to deploy call of centers, a team of experts across what is going to happen with Sprint. So there will be five major centers with 5,600 new employees. The existing centers will expand by 2,000 employees, meaning just in that area 7,600 jobs. Of the increase in jobs at T-Mobile, rural America will disproportionately benefit. There will be 600 new retail stores, 5,000 jobs. About 11,800 of the people that will do the integration and network deployment will be heavily in rural America and so there will be 5,000 retail jobs, over 7,600 customer care jobs, and thousands of jobs on network integration heavily all in rural America. Mr. Long. Thank you. And, Mr. Claure, should we be concerned that these two companies once merged would hold a significant share of the prepaid market? Mr. Claure. Even after the companies are combined, market share will only be 38 percent and the biggest beneficiaries will be those prepaid customers that are going to have the same access today to the great network that we are going to go build. So we believe we have been very clear that everybody is going to benefit from this merger whether you are a prepaid, whether you are a postpaid. Sprint has a long history of serving all prepaid customers all the way down to Lifeline to our different brands that we have, Boost and Virgin. And we have decided that we are basically going to keep all the brands, so therefore want to continue to up the ante in the prepaid ecosystem. Mr. Long. OK, thank you. Ms. Bennet, if you came down to Branson, Missouri and you went to the corner of Commercial Street and Main and on each corner there were different folks with carts selling Gala apples, apple company 1, 2, 3, and 4, selling edible apples, and one of those companies got to talking to the other one on a smoke break and said, hey, you know, we could combine and we could, you know, figure out how to grow more apples at less money, save on trucking expenses, bring them to the market at a smaller fee, do you think combining those two companies would affect the price of apples on that corner? Can you turn your mike on there, please, and turn it up a little bit? Ms. Bennet. Since we are talking apples I don't think that that would have an effect on the market because they are all the same. Mr. Long. OK. And---- Ms. Bennet. But the difference here is we are talking wireless and we are talking about wireless in rural America where both of these companies have had over 20 years to build out to rural America and Sprint tries a path of working with carriers. Mr. Brake over here just said, oh, that is a bad path to choose. Let's just eliminate all the rural carriers. There is your nail on the head on the antitrust concerns about here. These two companies have worked to--if they are combined together we are going to have the New T-Mobile with Mr. Legere sitting at the head who has not made one iota to build out to rural America. I don't even know if Mr. Legere has been to rural America. But it is a very hard row to hoe as you know with your rural constituents. It is a lot of work. It is a lot of money. It is a lot of fiber. Mr. Long. The four companies that are competing together regardless of the product that they are selling, if one of those combined with the other do you think that prices for their product would necessarily go up? Ms. Bennet. If we are talking apples and they are all the same---- Mr. Long. No, I didn't say we are talking apples. Ms. Bennet. Your example was apples. Yes, I think the prices---- Mr. Long. I moved on. I said we are talking about selling the same product. Ms. Bennet [continuing]. Are going to go up because I think they are motivated to put other companies out of business, other small companies. And that is just what I heard Mr. Brake said. Mr. Long. You think prices would go up then if the two of them combined? Ms. Bennet. I think prices will go up, yes. Mr. Long. OK. Now what if one of those companies just said this deal of selling whatever that service or product is, it is of equal value, maybe not apples but whatever that is, what if they said this is not as much fun as it used to be, you know, the competition has knocked us out, we are not making the profits, you know, for a shareholder, we are going to go out of business? Ms. Bennet. I think there is a lot of that---- Mr. Long. If they went away do you think that--let me finish my question, if you would. Do you think that that would also increase prices or would that lower prices if one of those three merchants went away? Four merchants, I am sorry. Ms. Bennet. I think that others will step in and sell the apples. Mr. Long. OK, my time has expired. I yield back. Thank you. Mr. Doyle. Thank you. The Chair now recognizes the gentleman from Florida, Mr. Soto. Mr. Soto. Thank you, Mr. Chairman. I think we all understand this is a complex decision which is why I thank all of you for being here today. We are dealing with various interests like workers and consumers, advancing technology like 5G and broadband, rates and competition, and I think, overall, my broadest concern is will this merger create a synergy? Will the ultimate proposed company be greater than the sum of its parts or will it not? Mr. Legere, first, you know, your company has a reputation of being a disrupter and that is a good thing, but it also draws concerns about whether that would continue obviously. We applaud your promise to have no rate increases for 3 years and have each worker have an opportunity to work somewhere else in the company. Would you also agree to have that as a condition of approval of the merger by the Federal Government? Mr. Legere. Could you repeat the commitment, sir? Mr. Soto. There were commitments that there would be no job losses and that rates wouldn't go up for 3 years. And I was wondering if you all would be in agreement with that being a condition of approval of the merger. Mr. Legere. Thank you very much, sir. All of my submissions of 24 million pages of documentation to the DOJ as well as all the work with the FCC makes it very clear that I am committing to prices declining and jobs increasing and I will make those commitments in any fashion that is necessary. If I could real quickly point out that I spend a significant time in my life in rural America as all of my employees around the country would point out. Mr. Soto. Thank you, Mr. Legere. I am sorry. My time is limited. But I appreciate that. Mr. Claure, would you also agree to these promises as a condition of approval of a merger by the Federal Government? Mr. Claure. Mr. Legere is going to be the CEO running the company, but what I can tell you is before agreeing to merger companies we have had lengthy discussion in terms of how important it is going to be to increase the number of jobs and to bring prices down. If we tried to keep this extremely factually, we are going to increase our capacity by eight times. There is no other way to do it, bringing your customers down to lowering prices. Mr. Soto. Thank you, Mr. Claure. So I accept those as both yeses then. Thank you for that. And, Mr. Shelton, can you go into what the current wages right now are at both Sprint and at T-Mobile versus other carriers and what your opinion is as far as how the merger would affect those wages? Mr. Shelton. Since we don't represent either Sprint or T- Mobile, I don't exactly know what the wages are in either of those companies. But I do know that when you decrease competition for labor, wage rates are going down no matter what you do. And the other problem that this merger would create is that by the companies' own admission there is $43 billion in synergies here. And to me synergies is a word that has a synonym called job cuts. And if there is $43 billion in job cuts, you know, you are going to decrease competition for labor, or increase competition for labor and therefore wages are going down. And they are not only going down in T-Mobile and Sprint, but they are going down in every wireless carrier in the country. Mr. Soto. Thank you. Mr. Legere. Sir, could I provide some facts to this discussion? Mr. Soto. I assume that you disagree with that. I have some other---- Mr. Legere. That was a significant absence of facts. I can tell you that the average wages of a retail employee at T- Mobile are approximately $50,000 a year. A customer care person makes about $46,000 a year. Every single employee receives stock grants every year as well. Mr. Soto. Thank you, Mr. Legere. Thank you for that. And that is important to get---- Mr. Legere. And synergies are not in jobs. Mr. Soto. Thank you for getting that on the record too. I want to end with Mr. Berenbroick. There is a public interest analysis that is done by the FCC. Obviously we are here in oversight of the FCC. Do you have any opinions on how this would score and any predictions on the FCC's review of this potential merger? Mr. Berenbroick. Sure. And thank you for the question. So as you know the FCC's analysis is different from the Department of Justice's. They both look at competition harms, harms to consumers, antitrust type issues. The FCC also looks at issues like, you know, will Americans continue to have access to---- Mr. Soto. Just if we could get to it, how do you think it will score? What is your prediction? Mr. Berenbroick. I think this merger has many of the same harmful characteristics, if not more, as the rejected AT&T/T- Mobile merger in 2011. Mr. Soto. OK. Well, thank you all for your opinions. Mr. Doyle. Thank you. The gentleman's time has expired. The Chair now recognizes the gentleman from Texas, Mr. Flores. Mr. Flores. Thank you, Mr. Chairman. And I appreciate the panel for joining us for today's hearing. Mr. Legere, would you repeat the comments you made about the use of Huawei and ZTE technology in your opening statements, for the record? Mr. Legere. Yes, sir. There is no Huawei or ZTE equipment in the network of T-Mobile. There will not be any. We will not be using any. In fact, we have had a litigious relationship with them and we are, frankly, very supportive of the United State Government's increased action against them. Mr. Flores. Glad to hear that. I spent 30 years of my life in business before I did this and 20 years of that was as a C- level person in companies and a big part of my portfolio had to do with M&A. And I had to look at every transaction as if there were only two outcomes because that is really the truth, either you are going to merge or you are not. The acquisition is going to happen or it is not. So we have had a lot of comments from the panel today about what happens if we do this, both some good, some bad. What happens if it doesn't happen? So, Mr. Legere, if you would, spend about a minute to talk about the impact on T-Mobile's customers and employees and stakeholders if the merger doesn't happen. Mr. Claure, we are going to go to you next. And, Mr. Brake, we are going to ask you about the wireless ecosystem at large if the merger doesn't happen. Mr. Legere. Yes, thank you. And I will try to be brief and pass to Mr. Claure. I will not be able to and the United States will not be able to enable its promise on building a world- leading 5G network. What we will create and Sprint will create along with AT&T and Verizon will be inferior to what is being created in China and in South Korea. That will lead to loss of jobs and economic impact in the country. I will not have the supply or the capacity to continue to supercharge the uncarrier. I will be able to move forward, but not in the same fashion creating competition. I will have limited if no ability to expand into the in-home broadband and provide Comcast and Charter the competition that they need. Mr. Flores. OK. Mr. Claure, could you talk about Sprint's, if the merger fails, the impact on Sprint's customers, employees, and stakeholders. Mr. Claure. Thank you. What I think that is important to reiterate is today we live in a duopoly. And you were a businessman and you know that if the duopoly, AT&T and Verizon, control over 93 percent of the cash flow that is generated it is impossible to compete. It is impossible to invest. So Sprint ain't going away, but what Sprint is going to be is going to be a very different type of company. It is going to be one that we can only invest in the traditional urban and suburban and we will bring a limited 5G. Unfortunately, as you know Sprint doesn't generate any cash flow. And if we have got to build this network on our own we need to spend between 20 to 25 billion dollars. We are going to have to go to the banks, we are going to have to go to the bond markets, and we are going to have to borrow that money. In order for us to pay back the investment in 5G, unfortunately, Sprint is no longer going to be able to be the price leader. Prices will go up. And I am going to reiterate one thing that we don't talk enough, 93 percent of the cash flow in this industry is being generated by AT&T and Verizon. That is exactly what as close to a monopoly or duopoly is in this country. Mr. Flores. OK, thank you, Mr. Claure. Mr. Brake, if the merger fails what is the impact on the wireless ecosystem writ large? Mr. Brake. Sure. Of course there will be a number of different impacts. But to my mind one of the most important impacts is you will see a much slower, more gradual transition to a 5G network. One of the main reasons for this merger is the synergistic spectrum that both T-Mobile and Sprint would combine. The low band spectrum and the mid band spectrum bring together coverage as well as capacity. Sprint with the limited cash flow is unlikely to be able to deploy, you know, a 5G network at the scale that would be needed to get the coverage out of the mid band spectrum. There is limited propagation. And the FCC is trying to bring mid band spectrum available to market that T-Mobile may have the resources to acquire, but that would be years down the road and would take a much longer process. I could talk for a while about the benefits of 5G and why that is so important. It is anticipated to be a very flexible, adaptable network, right, that isn't just about phones. It is about integrating with business and the broader economy writ large. So it is, I think, a strong national interest to make an accelerated transition to 5G. This combination is the most obvious, fastest way to get a good combination spectrum to see a really robust 5G network. Mr. Flores. Thank you for your responses. Mr. Chairman, I am going to give you back 15 seconds. Mr. Doyle. I thank the gentleman. The Chair now recognizes my good friend from California, Ms. Eshoo, for 5 minutes. Ms. Eshoo. Thank you, Mr. Chairman. And I apologize to all of the witnesses for not being able to hear all of your testimony. But I did review it. We have another very important subcommittee that is meeting upstairs, and I chair that and that is the reason I wasn't here. But I am now. I want to use my time not to ask questions but to make a statement. And again thank you for appearing, all of you, and for the testimony that you have submitted. I have had the opportunity to meet with various stakeholders of speaking to them and listening to them both pro and con about this merger. I have given a lot of thought to it. And as I said, I want to use this time to state my position. Since I first joined this subcommittee in 1995, only 5 minutes ago, my work has been guided by two overarching priorities: to create and maintain healthy competition in our country and to protect consumers. Capitalism doesn't work without competition, and when markets don't work consumers are the first to lose. Competition is the lifeblood of our economy. It stimulates innovation, something that my district produces a great deal of, and it benefits consumers with more choices, lower prices, and better service. Today, the top two wireless carriers in America control approximately two thirds of the market. They had roughly the same market share 5 years ago, 10 years ago, and 15 years ago. So this is hardly a competitive, dynamic market that we have. For all intents and purposes we have a duopoly in the country. Americans pay some of the highest prices for mobile wireless service in the developed world. They have fewer choices when it comes to providers, and the quality of service particularly in rural America leaves a great deal to be desired. Both Sprint and T-Mobile challenged AT&T and Verizon in recent years and they have fought tooth and nail to gain market share while adopting proconsumer policies that have forced real change in the industry. I heard the chairman's opening statement, and he detailed that I think very well. I admire and respect what they have been able to do, but both companies are missing a crucial ingredient to become heavyweight competitors in the market. T-Mobile has a strong track record as an aggressive competitor. That I think we can all stipulate to. But the company lacks critical midband spectrum to provide the network capacity it needs to compete more aggressively with the top two. And that is where Sprint come in. Spectrum is gold, and Sprint has it. But Sprint has something else. They have a $40 billion debt that they are carrying and they can't make the kind of investments that are necessary to build out a network and compete with the top two carriers. Sprint's debt, I think, is unsustainable and I think it is difficult to stay afloat while carrying it. It really holds one back to say the least. Now imagine if they go out of business, if they go bankrupt. This outcome would clearly, I think, be worse for the market for employees, for consumers, and I can just picture the Chairman of the FCC allowing the spectrum to go to the duopoly, so that is not a pretty picture either. I think it is something that we all need to consider. Some have argued that consolidating the current market from four carriers to three will increase prices and harm consumers. I think this argument assumes that the new company will not compete to lure new customers away from its competitors. It just doesn't make sense. In reality, I think the merger will increase the new company's network capacity eightfold. New T- Mobile will have the resources and the capacity to grow its subscriber base and to do so it will need to aggressively compete. They are not going to sit--why would someone buy and then sit on their oars and not try to attract new customers? So, some have raised concerns that the merger will harm low-income consumers. The companies have sworn under oath and made commitments to continue participating in the Lifeline program that I have fought so hard for and will keep prices low in the prepaid market. So I have more in my statement, Mr. Chairman, but I think each call center, all call centers are going to be coming back to the United States and new call centers are being added. That means more jobs. I know that one of the biggest rubs for my side of the aisle is that T-Mobile is not union. My personal preference is I wish they were, but they are not. But I think that competition and the protection of consumers is front and center in this and that is why I support the merger. I thank the chairman for his patience with my overuse of my time. Thank you. Mr. Doyle. As usual. I thank my friend. Ms. Eshoo. As much in as I can. Mr. Doyle. The Chair now yields to Mrs. Brooks. Mrs. Brooks. Thank you, Mr. Chairman. And thank you for holding this important hearing. I along with my colleague who could not be here today for obvious reasons, Debbie Dingell-- and I just want to extend my sorrow to her and to her State and district and to those who served with Chairman Dingell--we formed a 5G Caucus last Congress. And Congresswoman Dingell and I have certainly been educated and believe that there needs to be significant education in the country about the importance of 5G. And continuing to build on Congresswoman Eshoo's comments about the importance of competition, I got the sense, Mr. Brake, and would like because you were supporting this merger, but before I ask you about 5G, because I think you wanted to talk more about the importance of 5G, I would like to--I ask unanimous consent to enter into the record a letter dated September 17 of 2018 from the Indiana Chamber of Commerce. The vice president of environment and energy policy, Greg Ellis, Indiana Chamber of Commerce, submitted to the FCC a letter of support for this merger. I will say that Indiana, specifically Indianapolis and Central Indiana, is the first site in the country to have the build-out by AT&T and Verizon of 5G. So we are the only community in the country where that is happening right now, and I find it interesting and ask unanimous consent to submit this letter to the record that our Chamber of Commerce is asking for more competition and they are asking that the FCC adopt the merger and approve of the merger for the New T-Mobile. Mr. Chairman? Mr. Doyle. Without objection, so ordered. [The information appears at the conclusion of the hearing.] Mrs. Brooks. Thank you. Mr. Brake, on behalf of the Information Technology and Innovation Foundation, can you please talk with us about the importance of 5G? We need to do a better job educating everybody about 5G and the importance of how 5G, when we have rural communities still at 2G, 3G, 4G, we know there is a growing digital divide and how important it is that we catch up with Japan, with Korea, with other parts of the globe that are right now beating us in 5G. Can you very briefly talk about the importance of 5G? Mr. Brake. Right. Thank you very much, Mrs. Brooks, for the question. And thank you so much for your leadership with the 5G Caucus. We at ITIF are in strong agreement it is an incredibly important issue. So a lot to unpack with 5G, I will try to be as brief as possible. 5G in its sort of most capacious sense, right, the broadest sense of 5G is best understood simply by the specification, the technology defined by a standard-setting body, international standard-setting body called 3GPP. This new radio standard unlocks a number of different capabilities, but its sort of defining hallmark is its flexibility, its adaptability, right. As I mentioned in my opening statement, this isn't just about faster downloads and more responsive interaction with your phone, though it is that and that is important. It brings real consumer benefit. But there are a number of ways in which the technology can be, can adapt itself, for example, can radically simplify communications for IoT devices. So if something only needs to wake up, you know, once a day to send a little, you know, a few packets of information about the humidity on a farm or, you know, a water main leak or something like that, it can do so while maintaining extremely long battery life on the, you know, measured in the terms of years rather than days. So all this is to say that 5G poses a unique opportunity to see a much greater innovation of wireless services with the broader economy and has the opportunity to greatly increase productivity overall for businesses throughout America. That is why we want to see a quick transition to 5G in a way that is both broad and deep, right, and that is where the specific spectrum combination at play here comes in. Mrs. Brooks. This is going to be revolutionary, the possibilities of what 5G will bring. And so, Mr. Legere, I think the concern that you have heard about is how will this new network, how will the New T-Mobile, you know, help these untapped markets, these underserved areas, the rural areas? I represent both urban, suburban, and rural areas. How can we make it ensure that you are going to get there and that it is going to be more cost effective? Mr. Legere. Yes, thank you for this extremely important topic. And very importantly, one of the reasons the Nation is lagging in 5G deployment is that Verizon and AT&T have been stuck in providing millimeter wave in very small geographic areas. And for the promise of 5G to be true, we need all spectrum bands across all of the Nation. Think about something like autonomous driving, something where a 10 millisecond delay is attained by the 5G networks and you are actually going to have autonomous driving cars. How would that work if it was only in one small geographic area? T-Mobile and Sprint together are going to be the only full broad and deep 5G capability that is nationwide and that will spur AT&T and Verizon to broaden their views as well. Mrs. Brooks. Thank you. My time is up. I yield back. Mr. Doyle. The Chair now recognizes the gentlewoman from California, Ms. Matsui. Ms. Matsui. Thank you, Mr. Chairman. And I also apologize for not being here to hear your testimony because I was also on the Health Subcommittee hearing also. But I am curious. This is a very important topic and it is very important for the future of our country. Now I understand that Sprint is in the process of deploying massive MIMO radios to utilize its 2.5 gigahertz spectrum and complete the first 5G data transmission on a MIMO radio earlier this year. I realize it is technical, but I am leading to something here. As you know, band 41 was included in 3GPP's 5G new radio specification in late 2017. Of course, the benefits of these radios are that they enable both LTE and 5G transmission simultaneously and are software upgraded to the full 5G. This appears to offer a particularly promising path in the effort to deploy 5G. Mr. Claure, with Sprint already deploying this radio technology, is it necessary for the company to combine to deliver its next generation offering? Mr. Claure. Yes, thank you for your question. The important part when you build a 5G network is you want to be able to combine capacity, which is what Sprint has through massive MIMO and others, with coverage, which is what Sprint lacks. It will be no good for Sprint to offer just 5G in some specific neighborhood or some specific cities. What this is going to allow us to do when we merge with T-Mobile is we are going to be able to have the ultra-capacity that you have mentioned combined with T-Mobile's 600 megahertz spectrum that will give us the coverage. So it is necessary in order for the U.S. to lead in 5G which is quite necessary for our country, the combination of our two companies, it is the only way that we are going to be able to build a 5G network that basically has capacity all over the U.S. Ms. Matsui. So what I get from that is that you are definitely going to, Mr. Legere, adopt this deployment strategy and the New T-Mobile will leverage these assets in a way that Sprint has not by the combination; is that correct? Mr. Legere. Yes. Very importantly, and thank you for introducing 4x4 MIMO and carrier aggregation and 256-QAM which are the main characteristics of what AT&T is now falsely calling 5GE. We will put that in. One of the big issues with deploying a nationwide broad and deep network is the amount of sites and between T-Mobile and Sprint we have an inadequate set of network macro nodes. The biggest improvement here is together we have 110,000 macro nodes. We will be able to pick 75,000 of them, build 10,000 more, and the decommissioning of 35,000 of those sites is actually going to provide the significant amount of this synergy. When you take that many sites and you get that extra spectrum per site and the spectral efficiency of 5G that is the magic that unloads, you know, the real promise of 5G. Ms. Matsui. Now Sprint acquired Nextel Communications in 2005, bringing with it a considerable amount of band 41 spectrum leases and significant groundwork put into IP-based mobile broadband technologies. And with Sprint's Clearwire acquisition, the mobile broadband technology selected by both companies to leverage the spectrum assets for 4G was WiMax. However, Sprint began deploying LTE technology on its network in 2011 and the leap from third to fourth generation of mobile internet that WiMax was supposed to offer by utilizing Sprint's 2.5 gigahertz spectrum assets was not fully realized. Mr. Claure and Mr. Legere, what lessons do you see as being learned from this effort and how do those lessons inform your companies' 5G strategies? Mr. Claure. Thank you for the question. I think Sprint chose the wrong technology. WiMax was not the right technology. And what makes this merger unique is we are both choosing the exact same technology for 5G. And basically your complementary spectrum assets is what is going to allow us to go ahead and build the fastest--and we made both statements. I believe that we have a chance to build the world's best 5G network, as simple as combining the two spectrums that we have. Mr. Legere. Congresswoman, if I could just add, with all the great work that T-Mobile has done I think it points out that when these generational shifts take place in wireless, whether it was 3G to 4G, 4G to 5G, with all the great work we have done a big enabler of our ability to deploy 5G happened to be the spectrum and the cash that came to T-Mobile from the failed AT&T merger as well as the acquisition of MetroPCS and the utilization of their capabilities. So it does take the kind of things that we are able to do in this merger to provide that complementary spectrum as well as the financing and the assets that we don't individually have. Ms. Matsui. OK, thank you. And I ran out of time, I yield back. Mr. Doyle. I thank the gentle lady. OK, let's see. Who is left over there? Mr. Walberg, you are up for 5 minutes. Mr. Walberg. I am looking around and I don't see anybody else, so it is a pretty good pick here. Thank you, Mr. Chairman. And thanks to the witnesses for being here. Representing plenty of rural area in my district, this is an important hearing for me especially as a new Member to get up to speed, maybe at 1G or 2G, let alone 5G. But it is incredibly important to my rural district areas that we not be left behind as carriers move to 5G, but also probably more importantly that we get reliable wireless service to begin with, in the process. So, Mr. Legere, you have talked a lot about the jobs that might result if your transaction were to be approved both in your announcements of the new retail stores in rural parts of the country where you hope to expand service, but also to the new customer experience centers. But taking a step back, as you would build out your new network, can you talk a bit more about the cascade of high-skilled jobs that may result, whether it is tower crews erecting new macro cell sites or other industries like agriculture and manufacturing that might be fueled by a better connectivity? Mr. Legere. Yes. Thank you very much, sir, for the question. I would point out that the rural America has been left behind already. It is that divide that we need to cure. I am very proud of the fact that in the recent broadcast spectrum auction one of the first times that low-bid spectrum was made available T-Mobile showed up and won the majority of the spectrum and has been deploying 600 and 700 megahertz now to 301 million people in the United States. So we are bridging that basic divide already. Very importantly, CTIA has shown that the advent of 5G will mean three million jobs in the United States, $275 billion worth of investment and half a trillion of economic benefits. So whether they are jobs associated with the impact of utilization of new applications in 5G or the onslaught of the utilization, for example, in rural farming applications, et cetera, it is three million jobs that are at stake and with the deployment of 5G rural America will benefit the most. Mr. Walberg. That is important to understand because it is rural America that is catching up and too often left behind in the thought process that we don't need it. I am looking forward to the first time I have broadband to my house. Or cable. Or anything to my house. My agricultural industry is way beyond now what the capabilities they have available to them in many places. Mr. Claure and Mr. Legere, there has been a lot of discussion today about the spectrum bands that would help a New T-Mobile be competitive and able to better serve rural America. But Sprint also has a widespread network of wireless assets that would be just as critical for connecting the new network to the backbone and ensuring Michiganders can get wireless broadband access. Can you talk about--both of you--about these wireline components, while maybe not as exciting as the flashy 5G, how will those position your company to expand wireless connectivity to enterprises, customers both small and large? Mr. Claure. So thank you for the question and many times we don't talk enough of wireline, and wireline has been the backbone for wireless networks. The plan would be us to continue to invest in our wireline network and to continue to be able to compete against Verizon and AT&T who are even more dominant players in that wireline. And we are going to be able to do that through a different efficiency that we are going to have in this merger. Mr. Legere. Sir, I would just add, the enterprise business is controlled 90 percent by AT&T and Verizon. T-Mobile and Sprint have 5 and 4 percent market share. We are going to add 1,100 jobs into the enterprise space and we plan to double our market share in the enterprise business. Second part of building out this network, it is a bit of a build-it-and-they-will-come, and the fiber deployment associated with the backhaul required to build our network has been advancing greatly and about 86 percent of our build-out has been covered by that. So those are also good opportunities as well. Mr. Walberg. Thank you. Ms. Bennet, can you describe for me how you plan to compete with the New T-Mobile if the transaction were to be approved? What would happen to your prices and what would your subscribers' choices look like? Ms. Bennet. Our members are again concerned. We have been working with T-Mobile for the--or a form of T-Mobile before Mr. Legere joined. Back when we were trying to do 3G we tried to work--they had a big meeting. They brought all the carriers in. They said they were going to work with us. They were going to get us equipment discounts, all kinds of things to be a great rural partner. That never came to be. It was another promise they made to us that they broke. Again that was not on Mr. Legere's watch. It was prior to him. Since he has been on board we haven't seen them looking to work with us. So the concern is if T-Mobile wants to come out and build out and overbuild any of these rural carriers then we are there to compete. But for every cell site we have seen T-Mobile put up in a rural market we have at least 10 times the number of cell sites. So we live and work in those areas. And I am sorry that you don't have service in your area. I wish one of my rural carriers was serving out there. I am betting they don't, but if they did you would have a gigabit of service. You would have fiber. You would have fiber in the backhaul. You would have wireless. You would have 4G and you would have the promise of 5G coming. So we would do it if we were there. Unfortunately, we are not everywhere. And I think what T-Mobile probably fails to recognize is it takes a lot of work to build out a rural wireless network. We build out to where maybe only eight people will work a cell site. I don't think they are going to do that. So. Mr. Walberg. Thanks for the extra time. Mr. Doyle. The gentleman's time has expired. The Chair now recognizes Mr. Schrader. Mr. Schrader. Thank you, Mr. Chairman, a good hearing. I appreciate the hearing. Mr. Shelton, it doesn't seem like you are a big fan of this potential merger going forward. And I guess I have a question. My understanding was that CWA was a big fan of the AT&T/T- Mobile merger which would have consolidated the marketplace much more than what we are talking about here. So why was CWA in favor of one and not this particular merger? Mr. Shelton. During that merger we had a written, binding commitment for jobs and a binding promise not to interfere with our organizing at the new company. And that is why we were---- Mr. Schrader. Oh. Well, I understand that. That was to protect the union workers. But, you know, one can argue the consumers might have been terribly disadvantaged with that degree of consolidation. I just put that out there. I appreciate the work you are doing though very, very much on behalf of working men and women. I guess for Mr. Legere, you know, T-Mobile has been, especially since your tenure, been very disruptive--I mean that in a positive way--very innovative, you know, coming up with new ideas for the marketplace. You know, once you and Sprint, you know, merge together, you become one of the big three, you know, obviously there is not a lot of incentive to do that anymore. Can consumers expect to see less innovation from the New T-Mobile? Mr. Legere. Yes. Thank you very much for the question. Several pieces, in spite of how innovative we have been and the changes that we have been able to create, we have been unable to crack the share of the top two. They are fighting. We drag them kicking and screaming. But the capacity and the scale and the power of the network that this will give us will really let me take it to them and bring competition in a way it hasn't been seen before. And I am salivating to take it to the cable players as well. Suffice it to say, if in fact there was ever a fear that there would be a cozy side discussion of the apple vendors getting together, I am pretty sure these folks wouldn't speak to me if I was the last person in the room. So that is what this is about is creating scale and capacity to supercharge this uncarrier, bring the country to the forefront of 5G, and really drag these duopolists kicking and screaming to what they need to do for the consumer in wireless, I mean rural, as well as let's get into the in-home broadband market as well and make these cable guys start playing also. Mr. Schrader. Pretty good. Ms. Bennet, you have talked about the concern about low- income folks, the minorities, people that ostensibly don't have as easy access to, you know, internet services, broadband, and that the merger could be very detrimental to a lot of those folks that rely on some of the largesse from both Sprint and T- Mobile at this point in time. The question I have is why are you so concerned about that but the U.S. Hispanic Chamber of Commerce, the Black Chamber of Commerce, the National Hispanic Caucus of State Legislators, National Rural Education Association, Puerto Rico Chamber of Commerce all think this is a good thing? Why the disparity? Ms. Bennet. Well, first of all, I have been focusing on the rural carriers' perspective and we do have low-income folks in rural America that those carriers also serve. It is just a different position. I can't speak to why they are for it. It seems odd to me and I will just leave it at that. Mr. Schrader. Well, that is very fair, very fair. Mr. Legere, back to you, you know, while the market share may be small, a lot of the population in different areas seems to be concentrated in the Sprint/T-Mobile arena. With the merger, isn't this going to increase consolidation in the marketplace from a pure population standpoint and how do you respond to that as a problem, or? Mr. Legere. Yes. Well, first of all, the wireless business is a national market. Our pricing is national, the programs are national, advertising is national and the share concentration that we have will still, you know, be small compared to AT&T and Verizon as well as the marketplace for what we are trying to do is broadening. And, you know, you need to look at what the cable players are doing and the in-home broadband market, et cetera. So I think there is plenty of room. Mr. Schrader. All right, very good. And I yield back, Mr. Chairman. Mr. Doyle. I thank the gentleman. The Chair recognizes Mr. Bilirakis. Mr. Bilirakis. Thank you, Mr. Chairman, I appreciate it. And I want to thank the witnesses of course for being here today and testifying. Mr. Brake, toward the end of your written testimony you mentioned costs associated with switching providers and number portability. Over the years we have all seen the commercials in the cell phone market comparing rates, statistics, and data services. Can you further detail the ease, if it is easy, and costs of switching wireless providers, and do you have any information related to frequency a customer switches providers whether in the prepaid or postpaid market? Mr. Brake. Sure. Thank you for the question. Right, so switching costs have historically played a very important role in competition in communications networks, I mean going far back beyond even the advent of wireless, right, for wired telephone service. Number portability played an important role. If you can't bring your own phone number that all of your friends know to a new network you have little incentive to change costs. So there are a number of different tools that have made those switching costs lower and lower over time that makes it very easy for consumers to change providers. I think an important one going forward is this advent of the so-called eSIM, the electronic SIM card that allows for consumers to very easily change carriers and also plays an important role in the--or important future role in the MVNO market. When virtual providers can change the carrier that their consumers use it has an important role in maintaining competition in those markets. Mr. Bilirakis. Well, thank you very much. Mr. Legere, based on what you have heard, in a post-merger world if one of your competitors offers a great deal to new subscribers will a New T-Mobile be worried that it will lose users and feel pressured to offer a substantially similar deal to retain consumers in the marketplace? Mr. Legere. Yes. Thank you very much for the question. I want to point out that T-Mobile has been one of the main reason that customers are able to switch. Amongst the first things that I did was separate the device in the rate plan so that customers would know which was which, eliminate all contracts, and then I instituted the payment called ``contract freedom,'' where I would pay any costs that would be required if you wanted to leave your carrier. We have also been a strong proponent of eSIM as well which allows customers to move freely between them. I am not afraid of any kind of a competition from a standpoint of creating the value that customers would need to switch. And with the capacity that this network will bring and the scale and scope that I will be able to have and the unit cost, it is highly likely that I will be the one creating those offers that are going to cause people to think twice. Mr. Bilirakis. Thank you. It sounds like there is decent competition within the marketplace; is that correct? I mean you just said that so I will assume that. Is that right? Mr. Legere. Yes. Mr. Bilirakis. Yes, all right. Let's see. In closing, like Mr. Walden, I am wondering now is the process already in place for these types of mergers. The agency review process has been used successfully in the past to approve, conditionally approve and deny mergers. Like the sought-after mergers before this, I have full faith that the FCC and DOJ thoroughly review all the facts to determine whether it is in the public interest of course, the merger. Like the witnesses, I await the decision and the reasoning for that conclusion from all the information in the record. And I yield back, Mr. Chairman. Thank you for holding this hearing. Mr. Doyle. I thank the gentleman. The Chair now recognizes Ms. Clarke. Ms. Clarke. Thank you very much, Mr. Chairman. I thank our ranking member, and our panelists for their testimony here today. Speaking on behalf of my constituents in Brooklyn, New York, they care about creating and keeping good paying jobs particularly in New York City. However, they have grown quite weary and cynical of big corporations that seem to rake in money hand over fist while their hardworking neighbors have to pinch pennies to make ends meet or to even afford the corporate offerings that we hear about and that sound so great for the consumer. If T-Mobile and Sprint merge there is going to be one less employer in this particular labor market. So my question, first, is to Mr. Shelton. And Mr. Shelton, I would like to know if at all how will losing one additional employer affect the wages of communication workers, even those that don't work for the new T-Mobile? Mr. Shelton. As I have said before, when you decrease competition for labor, wages go down. And that is what will happen and it will happen throughout the whole wireless industry if this merger takes place not only at T-Mobile and Sprint, but also at Verizon and AT&T and any other wireless carrier. Ms. Clarke. Now what makes you say that? I mean currently you have a baseline of wages and what would less competition do in terms of particularly those in unionized shops of impacting on their wages? I think it is important for the public to understand that. Mr. Shelton. Well, we believe that there will be substantially less employees working at T-Mobile/Sprint and therefore you will be flooding the labor market with people who know the wireless industry and know how to do the job at any wireless company. The only one that we really have protections because of collective bargaining is AT&T. So at Verizon and T- Mobile and Sprint you will have wages going down. Ms. Clarke. OK. Mr. Legere, would you care to respond to those concerns of---- Mr. Legere. Yes. Thank you very much. And I would say that I have already made my commitments very clear to the State of New York associated with what employment would be and that jobs will be going up after this transaction. Competition is clearly going to go up and I would actually welcome greatly that you walk around Brooklyn to the many stores and experiences---- Ms. Clarke. They are all in my neighborhood. I don't have to walk because they are right there. Mr. Legere. And I would say you are going to find a very happy, very well paid, highly compensated group of employees that are extremely excited about this merger and the future. Ms. Clarke. Well, let me ask another question. Given that Lifeline provides essential service including mobile broadband service, does the New T-Mobile intend to continue Sprint's existing commitments to Lifeline and other contractual agreements that they have currently engaged in? Mr. Legere. Yes. And thank you very much for that opportunity to discuss this because it has been a question. Very clearly we are supporting the Lifeline agreements that Sprint has. And, frankly, you know, New T-Mobile will have a capability to support Lifeline that old T-Mobile didn't. So I think not only will we support all the agreements, but we will be a better Lifeline provider than we were before. Ms. Clarke. Very well. And then I would like to get a sense from you post-merger. What would be--well, what is the current and future racial and gender composition of your board of directors and executive management team? Can we get that information? Mr. Legere. I would be glad to. Our employees are 62 percent diverse, but I would be glad to provide all that information. Ms. Clarke. Looking at particularly the board and management as well as currently with Sprint so we can see what this merger does in terms of inclusion and diversity at the leadership level. Mr. Legere. I would be glad to include that. Ms. Clarke. Very well. Mr. Chairman? Mr. Berenbroick. Congresswoman? Ms. Clarke. Oh, sure. Mr. Berenbroick. Can I jump in on the Lifeline question very quickly? Ms. Clarke. Would you, please, absolutely. Mr. Berenbroick. So, you know, as you know, and you have been a champion of the Lifeline program, it is the service that serves the most low-income segment of the population that absolutely needs that subsidy for basic connectivity. Ms. Clarke. Yes. Mr. Berenbroick. Sprint has been a great partner in the Lifeline program. And you just heard Mr. Legere fail to make any commitments that New T-Mobile will actually participate in the Lifeline program other than keeping Sprint's current commitments in the Lifeline program. There was no future commitment to Lifeline. And most importantly, Sprint is a wholesale provider to many of the wireless resellers that participate in the Lifeline program and serve 70 percent of that marketplace. There was no commitment to continue those relationships going forward as well. Ms. Clarke. Very well. My time is up. But Mr. Legere, my eyes are on you. Mr. Legere. Yes, my microphone might have been off when I said we will honor all of the Lifeline commitments. We will be a good provider going forward and we honor all of the wholesale agreements that are in existence and look forward to extending those. Ms. Clarke. I yield back, Mr. Chairman. Thank you. Mr. Doyle. Thank you. The Chair recognizes Mr. Veasey. Mr. Veasey. Thank you, Mr. Chair. Mr. Legere, I wanted to ask you particularly about your economists. They told the FCC that this merger is in the public interest because consumers should be willing to pay more for a better product. And I want to know, will low-income consumers be able to participate in this better product or will they be forced to endure second-tier service because they cannot pay for the more expensive product? Mr. Legere. I appreciate the question, but I don't recall any time I have ever made a statement that customers should pay more for a better product. My whole philosophy has been to pay less and get more and that is the philosophy of the New T- Mobile as well. Mr. Veasey. If Sprint becomes your partner on this merger and it goes through, one of the areas that I would be interested in learning more about is if Sprint is not willing to make the commitment right now to build out their broadband and all the capacity that they have in that and expand upon that, why would they be willing to do it if there was a merger? If the investors that play a big part in T-Mobile and Sprint right now, many of them are the same investors, they have invested money in other adventures outside of the cell phone product. Mr. Legere. Yes. Mr. Veasey. So I guess I am trying to figure out what is it about this merger that would actually make them want to invest money moving forward. Mr. Legere. Yes, thank you. Thank you very much. It is a good opportunity to clarify. And I won't speak for the pace at which Sprint has invested, but I think Mr. Claure has been clear about the financial limitations that were put upon them. This transaction itself provides the financing that both of us need to do this build-out. And pinnacle to the whole thesis of this merger is an integrated network plan, you know, tens of millions of pages of documents and models that I have submitted to the DOJ as well as the FCC that show how at the time of merger moving forward we will fully integrate and build out these networks and how the $43 billion worth of synergies, 26 billion of which are coming from the network integration, will provide the financing for $40 billion worth of investment in the first 3 years in the 5G network. So the transaction itself is not only the financing but it is the accelerant of the investment. And it won't be Sprint building out, the New T-Mobile will be doing the integration and the build-out of the network. Mr. Veasey. The investors have the money right currently now. Why are they not building out that capacity as we speak? Mr. Legere. Again I think we have both been very clear that neither of us have the capital and the financing to do this 5G build-out. We have created a business plan and we have reviewed it with rating agents and we do have the ability to finance this through the New T-Mobile's company as well as the synergies that the deal will provide. And I just want to point out that at some point synergies were referred to as job losses and they are not. They are coming in the form of decommissioning of sites, of things that are part of the network integration, so that is the funding mechanism for this transaction. Mr. Veasey. Thank you, Mr. Chair. I yield back. Mr. Doyle. I thank the gentleman. The Chair recognizes the distinguished Minority Whip, Mr. Scalise. Mr. Scalise. I thank the gentleman. Mr. Doyle. And second baseman. Mr. Scalise. The second baseman in baseball, right? I thank the gentleman from Pittsburgh for yielding. The Pirates are represented very well with you. And I appreciate the opportunity to talk about this merger, some of the things that could potentially be done to increase the ability for consumers to be able to experience 5G. You know, you look at the growth in the industry and just, you know, what we are seeing in terms of more wireless usage, connectivity, the devices that are able to be connected, you know, and of course you see trillions of megabytes of data being used by Americans and that number is increasing. As people find out more uses it creates more jobs. It creates more opportunity. It creates more efficiencies and improvements in people's quality of life. And I do think that is an important point to talk about as, you know, as Americans use so many more devices and rely on that increased amount of data that they are able to access it does really improve their lives on a daily basis. There is things that I know I am able to do. You watch how it is able to allow people to do more things and in a much more effective way. I know you have talked about the jobs. I think, to me, some of the things that the Department of Justice should be looking at is, you know, if this merger goes through would it help consumers? Will it help lower costs? Will it create more jobs? And I know you have talked about some of that in your testimony, Mr. Legere. So if you could first talk about the ability for consumers to have more competition and have access to lower costs for the increased amount of data that they are using. Mr. Legere. Thank you very much for the question. There is so much in what you said that is extremely important including starting 5G. The promise of 5G is a hundred times the speeds, a hundred times the number of devices that can go on networks, 10 times the improvement in the response or the delay that is created. Our New T-Mobile will provide 15 times the speed that we have now, up to 450 megabits average speed across the U.S. and users will go from an average of ten gigs of data usage to 80 while the unit price will go down 87 percent. And the track record is there, especially with low-income users who have had a price decline and a disproportionate increase. So that is what this transaction with the DOJ heavily is about, showing the network modeling that will take this industry and significantly increase capacity and provide a pricing decline, and because of that network integration how that will impact consumers, the offers that they have and the utilization. And that is what their whole transactions review has been about thus far. Mr. Scalise. Yes. I think the idea that not only can you see in your case 15 times the speed as well as lower costs, both of those are, I think, something that would be very attractive to consumers who shop around really good for all kind of products, but clearly data plans. You know, you watch the commercials and the reason there are so many commercials is because there is a competition for consumers because everybody knows how important it is to be connected. And how you have talked about an integrated network plan, what these two companies can do to combine the resources that you have. I think hopefully one day not too long from now that little circle that you see when you are waiting for something to download will become a relic that the Smithsonian Institute might hold because people won't have that problem anymore. You will have to Google that--well, what are you talking about? I don't know what that circle is you are referring to. Mr. Legere. Sir, that will happen as soon as you switch to T-Mobile. [Laughter.] Mr. Scalise. I see you are already well-branded. Mr. Legere. Yes. Mr. Scalise. You know, it is a nice opportunity to give a plug for, you know, for your products. And again competition is what made this industry great. You know, when we look at what 5G can mean for consumers, because ultimately that is what, you know, we are trying to help make sure the consumers can have an even better experience, all this is coming from private investment and, you know, this isn't government that is spending billions of dollars to build out these networks. It is companies like yours and other companies. And, you know, we know all the other players in this space, but, you know, here we are talking about this, you know, this potential merger and how, I know what you talked about is how you can make those synergies work to provide an even faster experience and help you invest billions more to build that 5G network. Let's talk now about the jobs side of it. And I have heard numbers like 10,000 new jobs referenced. What kind of jobs are you talking about? I don't want to get into spectrum and some other things, but I am not going to have enough time to get into all of that. And maybe for the record later if you can let me know about some of the combined spectrum assets of the companies and how that would be good for more innovation and opportunities, but on the job side if you can touch on that is my last question. Mr. Legere. Yes, I would be glad to. We have talked a bit today about customer experience centers which are one of the core jobs in our company now. There will be 5,600 new jobs, 2,000 expanded jobs in that, so about 7,600 in the customer experience centers. And those are good paying, 45-$50,000 wage jobs. It would be about 11,800 people involved in network integration and deployment. There will be 5,000 people in new retail stores especially in rural America. And there will be about 11,000 jobs created over the period for the new businesses we are going in-Internet of Things, video, broadband, et cetera, businesses that we aren't in now. So those are the key growth areas of new jobs. Mr. Scalise. Thanks, Mr. Legere. I appreciate your testimony. Thanks for your discretion, Mr. Chairman. I yield back. Mr. Doyle. I thank the gentleman. The Chair now yields to Mr. Lujan. Mr. Lujan. Thank you, Mr. Chairman. Well, I appreciate the conversation today about 5G and what it will mean for our economy and our future. However, unfortunately, too many people where I live in a very rural State--my district is 47,000 square miles, it takes 8\1/2\ hours to drive across it--I have better connectivity over the State of New Mexico in many cases when I am on an airplane than when I am on the ground. I don't understand that. There is a promise now that 5G is going to answer this problem for people like me that live in rural America, and that is where my questioning concentrates. As Mr. ``Berenborick''-- did I pronounce that correct, sir? Mr. Berenbroick. Close enough, sir. Mr. Lujan. Pronounce it correctly for me. Mr. Berenbroick. Berenbroick. Mr. Lujan. Berenbroick notes in his testimony, this gap exists because low population density and high per-consumer costs means that rural areas have historically lacked the economies of scale needed to attract strong investment from major carriers. Mr. Legere, in your testimony you insist that a merger will allow you to, quote, close the gaps in rural broadband access and increase outdoor wireless coverage to reach 59.4 million rural residents or 95.8 percent of the estimated 62 million rural residents. Mr. Legere, first, yes or no, do you agree with Phil's diagnosis of why rural communities have been left behind? Mr. Legere. I apologize. I am not sure what the diagnosis was. Mr. Lujan. The gap exists because low population density and high per-consumer costs means that rural areas have historically lacked the economies of scale needed to attract strong investment. Mr. Legere. I would submit that that is an analysis that had to be have done by those that had the low band spectrum to cover those communities, which was AT&T and Verizon at the time. Right now that we have nationwide low band spectrum we are deploying quickly across all of rural America and it is our hope to cover every square inch. Mr. Lujan. So do you agree with Phil's assessment? Mr. Legere. I guess, sorry. Mr. Lujan. I am going to say yes, unless I was told no. Mr. Legere. I will make that a yes, sir. Mr. Lujan. Second, yes or no, would you agree that the merger's stated benefits to rural Americans are an important aspect of whether it should be approved? Mr. Legere. Yes. Mr. Lujan. Then help me quickly understand how this merger specifically incentivizes this proposed New T-Mobile to better serve rural communities and when can my constituents expect to enjoy the wonders of 5G connectivity? Mr. Legere. Thank you very much, sir. And yes, the rural divide is extremely important for us. One of the things that is very clear in the output of the models associated with the New T-Mobile is the deployment of the 5G capability will have a penetration across the country where 90 percent of every person in America will have greater than a hundred megabit speed and capacity by 2024. And I can break that down by rural community in any different part of the country. Mr. Lujan. So what I will do is I will submit some questions for the record. Here is the question that I have is that T-Mobile's chief technology officer, Neville Ray, states in an article CNET authored February 6, Mr. Chairman, that I would ask unanimous consent to submit to the record. Mr. Doyle. Without objection, so ordered. [The information appears at the conclusion of the hearing.] Mr. Lujan. What Neville says is that we wouldn't go after 5G millimeter wave deployment in rural America. So help me understand what this comment means. Will my constituents not enjoy the same speeds as people living in urban and suburban communities? Mr. Legere. That is a very good point, sir. And I would point out that that is probably more of a condemnation on the Verizon and AT&T deployment of 5G only in millimeter wave spectrum. Because the analysis would show that in order to use only millimeter wave to make a nationwide coverage it would need a site every thousand yards which would cost $1.5 trillion. So in order to deploy 5G nationwide you need to use millimeter wave, mid band, and low band across all frequencies so you have full geographic coverage. Nobody could cover the United States with millimeter wave spectrum. What is likely to happen is millimeter wave will be used in some densely populated urban areas and then enhanced with mid band and low band 5G coverage to make a broadband capability nationwide. Mr. Lujan. So the concern that I have is we also don't have robust fiber in many parts of rural America, and that is where I point my question back to Phil to give you a chance to respond. I notice your testimony, you discuss how 5G networks will need backhaul support from fixed broadband networks. Does anything about this merger address that need? Mr. Berenbroick. Congress, it is a perfect question. That is absolutely right. For 5G, especially for 5G that you know, we are talking about to get the full benefits of 5G that Mr. Brake has walked us through, you essentially need fiber backhaul everywhere to connect to those cell sites and towers. The companies don't actually bring those assets to the table. They need to lease those assets, which that is not a merger- specific necessity. They can lease those assets today. And T-Mobile, you know, has gone out on the marketplace and acquired 600 megahertz spectrum. You know, kudos to them for winning that spectrum at auction, and they have started to deploy it. They are making the case that their 5G deployment in rural America is based on that 600 megahertz spectrum. Those are assets they already have. That is not a merger-specific benefit of this deal. Mr. Lujan. And, Mr. Chairman, I know my time has expired, but as a former regulator details matter. And when I am told the rural America is going to get these assets and things don't exactly add up, I have a lot more questions. And so I appreciate the importance of this hearing, Mr. Chairman. There is some important aspects that we need some answers to associated with the commitments with mapping and looking at rural deployment. So, thank you, Mr. Chairman. Mr. Doyle. The Chair recognizes Mr. Cardenas. Mr. Cardenas. Thank you very much. Thank you very much, Mr. Chairman, and thank you so much for bringing this important hearing before the public. Mr. Legere, I understand you have made commitments to continuing the Lifeline program. You used the word, ``I will honor,'' just a few minutes ago. T-Mobile began withdrawing from the program in 2014 and no longer provides Lifeline services today. This service is extremely important where connectivity is basically required to survive both economically and when it comes to safety and education, et cetera. What is your commitment to Lifeline and how long do you intend to continue offering Lifeline services should this merger go through? And when you say you will honor, are you talking about the person, current CEO Legere, or are you talking about the New T-Mobile will commit to that in writing and make it real beyond your tenure? Mr. Legere. That would be the person and the New T-Mobile will put in writing and commit to honoring the Lifeline agreements that Sprint through assurance has. And I would point out that T-Mobile didn't withdraw from the Lifeline market, we moved to being a wholesale provider of it. But yes, the commitment is from the New T-Mobile and very willing to put it into any form. Mr. Cardenas. Well, thank you for clarifying. I wouldn't want to mischaracterize your business practices. But when you look at Claure, his Sprint is more robustly involved in the Lifeline program. What I would love to see is a future if this merger goes through, a future organization, the New T-Mobile as some people are calling it, to actually be more like Sprint. So, Mr. Claure, what would the New T-Mobile have to do in order to adopt and expand on what you have been able to do with your company? Mr. Claure. Thank you for the question. The New T-Mobile has made a commitment and they are doing it in writing, and we have taken one step above what was required from us and that is make a voluntary filing to the FCC that includes Lifeline. Nobody asked us to do that. We thought it was the right thing to do to take---- Mr. Cardenas. On that point, is the New T-Mobile willing to do exactly what Mr. Claure just described should this merger go through? Mr. Claure. Let me have one quick thing and that is we have always got to look at, yes, Mr. Legere is the CEO and there will be a New T-Mobile, but what is important to know is the new network we are going to build is going to have eight times the capacity that we have today. So therefore we have an economic incentive to bring as many customers as we can whether they are Lifeline, whether they are prepaid or they are postpaid. So yes, we made commitment. but in addition we have an incentive to do that just to fulfill our business plan. Mr. Cardenas. Without--now my question to you, Mr. Legere, about following suit with what Sprint has done to actually file a commitment in writing, is the New T-Mobile ready to do that? Mr. Legere. Yes. Just to clarification, sir, it was me that made the filing---- Mr. Cardenas. OK. Mr. Legere [continuing]. On behalf of the New T-Mobile. And again I want to reiterate we are merging with Sprint. Sprint is not going away. So all of the good characteristics and behaviors of Sprint we are adopting into the New T-Mobile, and this is one of them. And I will make the commitment in Lifeline in whatever form is needed. Mr. Cardenas. Mr. Berenbroick, are you familiar with that submission in writing that they are referring to? Mr. Berenbroick. Yes, sir. I am. Mr. Cardenas. Is it what I seem to be describing or is it a little bit less nuance than that and is it--what is it? Mr. Berenbroick. It is heavily caveated. Mr. Cardenas. There you go. Mr. Berenbroick. Sir. And, you know, like many of the commitments that we have seen here today, you know, I think Congresswoman Clarke asked questions about Lifeline too and the commitments were to honor existing commitments. There were no commitments to honor participation in the Lifeline program as the combined company going forward. Ms. Bennet has spoken about, you know, the high costs likely going up for roaming partners and in the MVNO market. That is a huge problem for Lifeline subscribers who may see costs go up and the commitments of these companies go down. Those issues all do need to be explored. Mr. Cardenas. And another thing, look, Mr. Legere, I have heard a lot of wonderful things about you and how you have really changed in a positive way T-Mobile. I commend you for that American business. Also, Mr. Claure, I followed your career as well. One of you guys wears tennis shoes. The other guys wear hard shoes to work. Apparently the tennis shoes guy is going to stick around as a CEO, likely, and then the hard shoes guy is going to probably remain on the board because of the shares that Sprint has or what have you. But what I have found when it comes to Lifeline specifically, I like the hard shoes guy and what he has been doing as CEO rather than the tennis shoes guy. So what are we going to expect to see from the New T-Mobile when it comes to really adhering to this opportunity when you very clearly pointed out the market share opportunity for the New T-Mobile is going to be amazing especially when it comes to your positioning to be able to provide 5G which is the future of any provider? Mr. Legere. Yes, sir. I can only reiterate the New T- Mobile's commitment to Lifeline and I will follow up in any form necessary after this hearing to make sure that that commitment is clear. Mr. Cardenas. Thank you, Mr. Chair. Mr. Doyle. Right. The Chair recognizes Mr. Welch. Mr. Welch. Thank you for the hearing, Mr. Chairman. I am going to make a few comments that express what I consider to be major concerns about rural America. We do not have good coverage in Vermont. And the assertion that both gentlemen are making is that this will be tremendous for rural America. I would like to believe that is true, but I have an apprehension that it won't necessarily occur. You know, last February Congress passed and the President signed some bipartisan legislation that I worked on with David Young improving rural call quality. And it turned out that shortly after that bill became law, T-Mobile and Sprint--the FCC announced that T-Mobile agreed to pay $40 million in a fine for violating FCC rules with a practice of faking ringtones. I mean this is a big deal for us in Vermont. Dakin Farms in the Christmas season depends on those calls. Camel's Hump School gets the word out that it has been canceled because of weather. And in the settlement, T-Mobile acknowledged it had injected false ringtones in hundreds of millions of calls. I mean, that is really upsetting to us. And I am struggling to see how this past gives me confidence about the future. So, Mr. Legere, can you explain how T-Mobile did fail to abide by the basic call quality standards in not connecting hundreds of millions of calls in rural America? But very briefly because we don't have much time. Mr. Legere. Yes, sorry. You know, the details associated with the settlement associated with that action are far more complex, and I am not sure we could go into the process here. Mr. Welch. Well, maybe offline we could do that. Mr. Legere. I would be glad to. Mr. Welch. Because that is--what you are admitting to, or T-Mobile admitted to, was that it actually had the system false ringtones. Mr. Legere. Yes, there was no admission to a willingness of participation in any kind of fraud. Mr. Welch. Well, that is--I mean you, and I both know that is sort of the deal, but it happened. And then this brings me to my point about wireless coverage, and I am a little skeptical about the deployment promises in rural areas. Mr. Chairman, we have got a map of T-Mobile coverage in Vermont, and it looks pretty good. It is pretty much the whole State. But the Burlington Free Press had somebody get in a car and travel the roads, the main roads, for 6,000 miles, and take signal coverage over 6 weeks this fall. And as I mentioned, it was only on the main roads and it was covering about 65 percent of the buildings in Vermont. And its results contradict many of what the assertions that are made by T-Mobile and Sprint. The data on T-Mobile and Sprint, T-Mobile covers 22 percent of the area tested in the State with 5 megabits per second or greater speed. T-Mobile has no service or spotty service in 62 percent of the areas. Sprint has no service or spotty service in 50 percent of the areas. And when I sit here and hear what I believe is your sincere goal to serve rural America and bring 5G to rural America, in a lot of Vermont we have no G and these maps don't correspond to what the Burlington Free Press found. So I am a skeptic, all right. And I guess I am going to ask both of you, Mr. Legere and Mr. Claure, when you use your maps you are saying it is 96 percent coverage? These maps are bogus. I mean, they just don't work. So are you going to redo your mapping so that what we are talking about is apples and apples and not apples and oranges, briefly? Mr. Claure. Thank you. I will take the answer. Today, Sprint has a very limited coverage, and we rely mainly on AT&T and Verizon to be our roaming partners outside of core zone. So we are basically replicating what the maps of AT&T and Verizon---- Mr. Welch. Well, they are no good. Mr. Claure. What is that? Mr. Welch. These are no good. These are phony maps. Mr. Claure. But the problem that we have today is a very serious problem. The two spectrum holders have been AT&T and Verizon, and they have failed to serve rural America. The commitment that we are making is to build a nationwide coverage---- Mr. Welch. Right. Mr. Claure [continuing]. Because we just got 600 megahertz just a couple of years ago, and we are going to deploy it as fast as we can. Mr. Welch. Well, I mean, if you were sitting where I am and getting the calls I am getting from Vermonters who have a map that says they have fantastic service and they can't get a dial tone, you would share my skepticism. This is a big deal. Mr. Legere. Sir, your concerns are very real. And the commitments and the filings that we have made are about the network we will create, and we have a strong commitment to cover rural America. Thank you. Mr. Welch. OK. Mr. Chairman, I would like to submit for the record these documents that I referred to. Mr. Doyle. Without objection, so ordered. [The information appears at the conclusion of the hearing.] Mr. Welch. I yield back. Mr. Doyle. And now we come to our final witness, Mr. O'Halleran. You have got 5 minutes. Mr. O'Halleran. Thank you, Mr. Chairman. I am sorry I didn't make it on time today. I had a commitment at the other side of town. But, boy, I have sat here through this hearing and listened intently on issues about rural America and I have heard time and time again that they will be treated differently from now on. That doesn't seem to be the case. They are still going to be at the low end of the pole. They are going to be down there with the lack of ability to compete, lack of ability to make sure the families of rural America have the health care necessary through telemedicine, the need for our businesses to be able to expand and economic development to expand and all of a sudden we are back to the same old thing. We are back to the cities and everybody else getting the higher amount of coverage than rural America. That is unacceptable. I have a map just like the gentleman from Vermont had and I travel. My district is 58,000 square miles. Half the time that map says I should be covered. Half the time I am not, by anybody. And so there is a lot of work to do. And what I have also heard today are semi-commitments, you know, we are looking into it. I mean if--and I have also heard that it is about productivity. Mr. Brake, I understand productivity. I also understand the needs of the citizens of rural America and the needs of the citizens for everywhere to be competitive with the rest of the world. We understand that. But I really am concerned with the type of information I heard today. Mr. Legere, and you have indicated very much that on the Lifeline and Tribal Lifeline program that you are--are you committed? Are you going to ensure, are you going to guarantee that those programs will be completed, completed and stay, and how are you going to do that? What is the plan, the real plan of how, and be specific as you can. Mr. Legere. Yes. Sir, on--thank you very much and I appreciate your patience. On Lifeline it is very clear Sprint is a big provider of Lifeline services and we will honor their commitments and move forward providing Lifeline in the fashion that they do. And the 5G capabilities that we have will make us an even better Lifeline provider. Second, sir, I would submit to you---- Mr. O'Halleran. Just a second. I want to make sure that-- their commitment, honor what they do, for how long? Mr. Legere. For as long as the contracts are available. Mr. O'Halleran. So how long are those contracts available for? Mr. Claure. Those are contracts that self-renew. And we have, as part of the merger we have discussed that the New T- Mobile will basically honor all the commitments and we will continue to be a fierce competitor in the Lifeline the same way as Sprint has been. Mr. O'Halleran. So as long as the contracts go. It is not into the extended future, it is just the contract life of that particular contract. Mr. Legere. Sir, could we be clear? The New T-Mobile is---- Mr. O'Halleran. And just a second, I am sorry. It is my time. Mr. Legere. OK. Sorry, sir. Mr. O'Halleran. I just, as somebody that represents Tribal nations, 12 of them, as somebody that represents vast amount of towns in rural America, I am really concerned from what I have heard. And, Mr.--I am going to try to get your name right, but I know I am not going to do it--Berenbroick--no, never mind. What do you anticipate this merger's impacts could be on the tribal Lifeline program and do you anticipate the FCC and DOJ will meaningfully enforce any conditional commitments made as part of an approval, and anything that we talked about here if you have comment on that? Mr. Berenbroick. Sure. And thank you for the question. This is an important line of questioning and I am glad the committee has gotten into this. So, you know, as you know tribal lands are some of the most underserved areas of the country. You know, facilities-based providers often provide wholesale service to resellers that serve the tribal Lifeline marketplace. One big concern in this merger that we have talked about here is we are consolidating that MVNO, or sorry, that wholesale marketplace under only three providers who have fewer incentives to provide a low-cost wholesale access. And Carrie, Ms. Bennet has spoken to this a little bit. So what we think that means is the incentives in the marketplace will be to increase the costs that those resellers have to--that those tribal resellers have to pay for Lifeline, those resellers that serve tribal lands pay for Lifeline driving up the costs in the Lifeline marketplace, potentially driving some of those resellers that serve those communities that you care about out of the market entirely, potentially leaving those consumers without any Lifeline provider. Mr. O'Halleran. Thank you. And thank you, Mr. Chairman. Mr. Legere. Mr. Chairman, could I make a final comment, please, shortly, which is just that with all the concerns about rural America, this transaction is the best path forwar4d for this country to solve the issues of rural America. So I vehemently believe that is the best path forward. Mr. Doyle. OK. All time is expired. I request unanimous consent to enter the following documents into the record: A map from CWA of Sprint and T-Mobile's retail distribution for Newark, New Jersey; an op-ed by former Reps Waxman and Tauzin; a statement for the record from Consumer Reports; a blog post from INCOMPAS; a report from the Vermont Department of Public Service; a map of T-Mobile's U.S. wireless coverage; a report from the Democracy Reform Task Force; a report by GSA Inspector General; a letter from Representative Cardenas, et al, to John Legere; a letter from the National Diversity Coalition; a letter from CASE; a letter from J. Kenneth Blackwell; a letter from Let Freedom Ring; a letter from Consumers' Research; a letter from Americans for Limited Government; a letter from Americans for Tax Reform; a letter to the FCC and DOJ from Members of Congress; and last, but not least, a letter from coalition members. Without objection, that is so ordered.\2\ --------------------------------------------------------------------------- \2\ The information appears at the conclusion of the hearing. The Democracy Reform Task Force and GSA Inspector General reports have been retained in committee files and also are available at https:// docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=108895. --------------------------------------------------------------------------- Mr. Doyle. Well, I want to thank the witnesses for their participation in today's hearing. And I want to remind Members that, pursuant to committee rules, they have 10 business days to submit additional questions for the record to be answered by the witnesses who have appeared. I ask each witness to respond promptly to any such questions you may receive. At this time, the subcommittee is adjourned. [Whereupon, at 1:08 p.m., the subcommittee was adjourned.] [Material submitted for inclusion in the record follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]